How taxes change when selling a home (article by Skliarenko, Sidorenko & Partners)

It seems that Ukrainians under any circumstances will face an increase in personal income tax in real estate sales. And although the Verkhovna Rada has been committed to eliminating tax minimization schemes, the changes will also affect honest taxpayers.

The provisions of the draft Law № 5600 “On Amendments to the Tax Code of Ukraine and Certain Legislative Acts of Ukraine to Ensure Balance of Budget Revenues” were analyzed for the publication “Legal Practice” by Tetyana Borysenko, a lawyer of Sklyarenko, Sidorenko & Partners JSC.

Today, the sale of real estate is not taxed in the presence of the following set of conditions:

1) this is the first transaction in the tax period (year);

2) the property has been owned for more than 3 years (does not apply to cases where the property was inherited);

3) the area of ​​land does not exceed the norm of gratuitous transfer, defined by Article 121 of the Land Code of Ukraine (for land plots).

Otherwise, according to paragraph 172.2 of the Tax Code) the tax rate on income received by the taxpayer from the sale during the reporting tax year of more than one of the residential real estate is 5%. This PIT rate applies to the sale of any real estate, both residential and non-residential.

In an effort to find additional sources to fill the budget, the authorities decided to raise the personal income tax rate. Thus, according to the №5600 project, for the sale of the second residential real estate object during the year, 5% of its value will have to be shared with the state, and the state plans to "bite off" as much as 18% of the third and all subsequent ones. Non-residential properties will have to be paid immediately - 5% for the first and 18% - for the second during the year and all subsequent - 18%.

Read the full version of the article on the publication's website