Finding a good realtor, paying commission for their services, placing an offer for sale and waiting—this is hardly a complete list of what the owner of real estate in Ukraine has to do. You will also have to pay a state fee, and in some cases—notary services as well.
Let us tell you what taxes will have to be paid when selling real estate in Ukraine in 2021, what their amount is and when you might not pay income tax on the real estate sale.
What taxes are there for a seller of real estate in Ukraine
The Real Estate Purchase Agreement involves a number of mandatory taxes and fees for the property owner. When selling real estate, the seller pays three taxes:
- state fee in the amount of 1%—mandatory;
- income tax 5% for residents and 18% for citizens of other countries—optional;
- military tax—1.5%—optional.
In any case, the seller of real estate in Ukraine in 2021 will have to be generous and pay 1% of the state fee out of his own pocket.
This means that you must pay a tax of 1% of the estimated amount on the total value of your lot, apartment, or house to the state. For instance, for an apartment of $50,000, the state fee will be $500.
The second possible payment when selling an apartment in Ukraine in 2021 is a military fee. It is 1.5% of the agreement amount. For our example, this would be $750.
However, there is a nuance: the military fee will have to be paid only if you need to pay tax on personal income.
When one needs to pay tax on personal income from the sale of real estate in Ukraine
To understand when and to whom you need to pay income tax when selling real estate in Ukraine in 2021, it is important to answer yourself a number of questions:
- How many sale and purchase transactions did you have in the reporting year? If it is more than 1, then the tax will have to be paid for each next one.
- How many years have you owned an apartment or house for sale? If less than 3 years old, prepare for additional payments.
In other words, if the resale of apartments is a business for you, you have invested in more than one apartment and are trying to sell both in the same tax year, you will have to pay 5% of the lot value out of your pocket.
If this is the first sale of an apartment in the reporting year, then you are safe from the income tax.
If the apartment has been in the property for less than three years, and you decide to sell it for some reason, the tax will also have to be paid.
What is the income tax on the sale of real estate for non-residents of Ukraine in 2021
Investments in real estate in Ukraine among citizens of other countries are becoming more and more popular. Their share in the total market structure currently reaches about 10%, while back in 2018 it was at the level of 5%.
More often than others, citizens of Azerbaijan, Georgia, Israel, Germany, and Lithuania choose Ukrainian apartments for investment due to the low entry threshold, the minimum return period, and the high return on investment.
For residents, the amount of personal income tax on the sale of real estate in Ukraine in 2021 is 18%.
When the income tax from the sale of apartments might not be paid
In Ukraine, not everyone needs to pay personal income tax. If you own an apartment or a house for more than 3 years and this is the first transaction for the reporting year, there will be no additional payments to the treasury for you.
In addition, if the property is inherited and you want to sell it, income tax is also not charged.
Additional payments for the sale of real estate in Ukraine in 2021
Do not forget about the commission to the realtor—a market average of 2.5-5%. Notary services will cost about 1.5-3%, as luck would have it. Sometimes the seller and the buyer agree to split this amount 50/50.