Land market has started working in Ukraine: what you need to know about prices, taxes, and documents for purchasing land

Author

Anton Korzh

On July 1, 2021, the land market was launched in Ukraine. Now Ukrainians can sell and buy land plots absolutely legally.

has compiled basic information that you need to know about the land market in Ukraine: how much a hectare of agricultural land will cost, what documents are needed, how much taxes you need to pay and other important information.

Who can buy land in Ukraine

So far, only individuals—citizens of Ukraine can acquire plots within the framework of the land market. There is a strict limit for the land consolidation in the hands of a single person—no more than 100 hectares. The tenants have the preferential right to purchase land: they will have two months to decide whether they are going to purchase it.

Legal entities will be able to buy land only from 2024. At the same time, the maximum volume of concentration of land holdings owned by one legal entity will increase to 10,000 hectares.

Foreigners will be allowed to buy Ukrainian land only if Ukrainians vote for it in a referendum. But even with a positive decision, they will be prohibited from buying land in a 50-km zone near the borders of Ukraine.

It is strictly forbidden to buy Ukrainian land for Russian citizens, as well as accomplices of the occupiers from the pseudo-republics of L/DPR and Crimea.

However, some conventions can be easily circumvented. Although legal entities were banned from buying land until 2024, they can secure the leased territories by transferring the preferential right of redemption to affiliated individuals.

Also, the limit of 100 hectares can be circumvented by involving into the land purchase buyers connected with the farmer: relatives, friends and others. The main thing is that they can explain the origin of the funds.

How much will land cost in Ukraine

The price of land in Ukraine will be primarily generated by the market. The cost of a hectare of land will depend on many conditions: area, location of the plot, climatic conditions. And it is unlikely that it will coincide with the estimated cost from 21,000 UAH to 34,000 UAH, depending on the region.

But in any case, in the first five years, as predicted by Prime Minister Denys Shmyhal, the cost of land in Ukraine will at least double.

In Ukraine, according to the State Geocadastre, there are 32.3 million hectares of registered land. 19.9 million hectares of this area are leased.

At the same time, at least 27.6 million hectares are concentrated in the hands of 6.9 million private owners. The average plot size is 4.5 hectares.

How to sell or buy land in Ukraine

To sell or buy land, several things are needed: Ukrainian citizenship, money, and a package of certain documents.

Documents required for selling land:

extract from the State Land Cadastre;
copy and original of passport and taxpayer identification number;
document confirming the payment of the administrative fee;
a document on the land plot title (state act on the land ownership, contracts of sale, donation, exchange, court decision, certificate of the inheritance right).

Also, the Cabinet ordered notaries to check land buyers and sellers. The notary checks in the state registries that the parties to the transaction are not subject to sanctions, do not finance terrorism, are citizens of Ukraine, and the buyer has not exceeded the limit of land concentration in the hands of one owner.

If the check shows that everything is in order, the notary certifies the agreement of sale and purchase and the document comes into force.

Also, land can be bought and sold at electronic auctions. But they will start working only five days after the start of the land market, that is, not earlier than July 6.

An important point—no one can force the share owner to sell his land plot. At the same time, many Ukrainians have a negative attitude to the reform and do not intend to sell their plots.

What taxes must be paid when selling and buying land

Both the buyer and the seller need to pay only two taxes in the process of the land plot acquisition transaction:

personal income tax—5% of the transaction amount specified in the agreement;
military tax of 1.5%.

Both taxes must be paid before the notary certifies the contract. However, it is possible not to pay tax to the state if the land was obtained on the basis of Art. 121 of the Land Code for personal farming.

Context. Land reform in Ukraine has been going on since the fall of 2019: it was then that the Verkhovna Rada adopted the bill on the land market in the first reading. The start of the land market on July 1 is the logical conclusion of the reform.

Back in March 2020, the Rada approved the law on the agricultural land commerce, but then the reform stalled. Only in 2021, the deputies adopted the rest of the bills: the law on electronic land auctions, the law prohibiting the registration of land to officials, and the law on transferring land outside settlements to communal ownership.