Real estate tax for individuals in Ukraine in 2021

The more so because in 2020, the Verkhovna Rada first adopted Law No. 533, providing for benefits due to quarantine and an emergency in the country, and then Law No. 540 was implemented, which clarified the land tax and the property tax abatement. Let's try to find out all this.

Who is to pay property tax in Ukraine in 2021?

Real estate tax in Ukraine is paid by individuals who own real property. First of all, this applies to houses and apartments.

The tax is paid by all owners who own the property on the basis of shared ownership. The amount of the contribution is set in accordance with the share size. There are occasions where a housing has several owners, but it is not actually divided. Then only one owner pays by agreement of other owners, unless otherwise is stipulated by the court.

What objects are subject to taxation?

Any residential and non-residential real estate objects are subject to taxation if they are not included in the list of non-taxable objects. Not everyone has to pay tax, but only when the object meets certain conditions:

• Apartments with an area of more than 60 sq.m;
• Residential buildings with an area of more than 120 sq.m;
• Other real estate objects with an area of more than 180 sq.m.

Real estate tax in Ukraine: clarifications.

The owner of the property does not have to pay tax for the entire property, but only for those square meters that exceed the specified limits. For example, the owner of an apartment with an area of 100 square meters only has to pay tax for 40 sq.m (100 sq.m - 60 sq.m = 40). An exception is the objects of entrepreneurial activity rented out or used for business. In this case, the entire apartment is taxed.

There is another property tax, commonly known as the “luxury tax”. For apartments with an area of more than 300 sq.m and for houses of more than 500 sq.m, it is necessary to pay not only the tax for each meter in excess of the established limits, but also UAH 25,000 per year.

You can choose real estate objects in Ukraine with the help of  RIEL Real Estate Corporation any time, it has been operating since 2003 and has an excellent reputation. For example, if you do not want to pay real estate tax, RIEL is ready to help you choose an object of the appropriate area.

What real estate objects do you have to pay tax for?

The law provides for a long list of non-taxable real estate objects:

• objects in exclusion areas and in compulsory evacuation zones;
• real estate of organizations that are supported by the state or local budget and are not profitable;
• residential and non-residential real estate owned by state or local authorities;
• buildings of general education and preschool institutions;
• real estate owned by religious organizations (except for objects intended for economic and / or production activities);
• orphan homes and hostels;
• apartments that are officially dilapidated and uninhabitable;
• real estate used by medium and small businesses that conduct business activities in the markets and in small architectural forms;
• sanatoriums and health resorts for children;
• facilities of communal and state centres for Olympic training, children's and youth sports schools;
• residential real estate owned by foster families or large families with more than 5 children in foster care;
• bases of Olympic and Paralympic training and many other real estate objects.

How much will you have to pay in 2021?

Many people are interested in what the real estate tax in Ukraine is. In fact, the size of the tax is set by local authorities, so it may have minor discrepancies in different regional centres, villages and other settlements across the country. However, the tax levy should not exceed 1.5% of the minimum wage in the country as of January 1 of this year per one square meter of taxable area.

As of January 1, 2020, wages in the country were set at UAH 4,723. 1.5% of this amount is UAH 70.8. This is the maximum amount that the property owner must pay for each extra square meter. As mentioned, for apartments, it is 60 sq.m, and for residential buildings - 120 sq.m. That is, for an apartment with an area of 100 square meters, you will have to pay real estate tax in the amount of up to UAH 2,832 (40 sq.m * 70.8).

It should be noted that in 2021, the 2020 tax is paid respectively, the level of wages as of January 1, 2020, is therefore taken into account. And in 2022, the size of the minimum wage as of January 1, 2021 will be taken into account.

Compared to 2020, the maximum tax amount increased slightly, because in 2020 it was UAH 62.5. As you might guess, this is due to the minimum wage size increase countrywide.

You can find out the size of the tax rate in local authorities, as well as look at the official website or on third-party resources. For example, in Kyiv you have to pay 1.5%, and in Zhytomyr and Lviv - only 0.5% (UAH 23.61) for apartments and 1% (UAH 47.23) for residential buildings. In Kharkiv, local authorities went to even greater lengths: in the city in 2021, they not only lowered the tax rate to 1%, but also changed the minimum allowable area of ​​an apartment that is not taxed. In Kharkiv, since 2021, it is 85 square meters. That is, apartments with a smaller area are not subject to real estate tax.

Procedure and terms for payment of real estate tax

The owner of the property receives an official message on the payment of a certain amount, as well as payment details. If the real estate object has just been put into operation, then payment is made starting from the month when the right of ownership became vested.

Taxpayers can submit a written application to the control authorities in order to check the following information:

• what objects are owned;
• the area of these objects;
• availability of the right to use property tax benefits;
• the tax rate size;
• accrual amount.

For example, if the regulatory authorities have counted a large amount for the incorrectly indicated area of the apartment, then the owner has the right to write a statement and provide the originals of the relevant documents, on the basis of which the recalculation will be made. After recalculation, a new tax notice is sent to the taxpayer, and the previous one is cancelled.

The notification about the necessity to pay tax must be received before July 1. From the moment of receipt of the decision notice, the taxpayer has 30 calendar days to deposit the required amount. If you pay later, an additional penalty of 10% of the payment amount will be charged. If the payment is overdue for more than 30 days, then the penalty increases to 20% of this amount.

If the regulatory authority did not send or did not deliver the tax notification in a timely manner as by law enacted, then the individual is not responsible for the untimely tax contribution. However, experts recommend that in the absence of notification, take the initiative and independently clarify the situation with the supervisory authority. There are cases when a message does not come and an individual does not pay the tax, and then is charged with huge fines, because the regulatory authority sent a message, but for one reason or another it did not make it out to the addressee. It is extremely difficult to prove your case in such a situation.

What are the benefits?

The question of who is exempt from paying real estate tax is quite relevant for many Ukrainians. First of all, it should be noted that this tax is not paid by persons who own an apartment up to 60 sq.m and/or a residential building up to 120 sq.m. If we talk about benefits, then they, like the tax rate, are established by the decision of local councils. That is, the local government determines the list of privileged categories of citizens itself. At the same time, one should take into account the financial situation of an individual, the amount of property owned, the state of the object of taxation and other factors.

As far as tax abatement in concerned, this applies to large families and foster families in which five or more children are brought up. This also applies to disabled children and orphans. Other categories of citizens are required to pay property tax.

Benefits cannot be obtained in the following situations:

• the area of the object is five times larger than the tax-free area (300 squares for apartments, 600 for houses),
• real estate is used by an individual to conduct business for the purpose of making a profit.

Do retirees pay property tax?

One of the most popular and frequently asked questions on the topic is “Do retirees pay property tax in Ukraine in 2021?” First of all, it should be noted that Ukrainian legislation in this matter is unambiguous: pensioners and other elderly people pay real estate tax in the same amount and on the same terms as young people. Many people are outraged by this, but the State Fiscal Service of Ukraine has its own opinion on this. Pensioners have to pay this tax because many elderly people have wealthy relatives who own luxury apartments and register all their properties on an older relative. Thus, some businessmen and officials can evade taxes.

Already, some pensioners receive “good luck letters” from the tax office indicating their large debts. The retiree may live in a small apartment on the outskirts of the city at this time and not guess that his grandson or another relative just decided to register their property on their grandparent, hoping to avoid paying real estate tax. It's just that some cunning relatives have not studied the law and do not know that retirees also have to pay tax on real estate, age is not the basis for receiving benefits or, even more, for tax abolishment.

With this in mind, the answer to the question “Do retirees pay property tax in Ukraine in 2021?” is always unambiguous – they pay on an equal basis with other persons who own real estate, which outrage the established area.