The real estate market has frozen in the new year. The rules for taxing the purchase and sale of apartments, houses, and dachas have changed. On January 1, certain provisions of the law "On Personal Income Tax" came into force.
In practice, using the new rules turned out to be difficult. Notaries were now supposed to be responsible for the correct determination and payment of the tax. But they have legal education and understand little about tax subtleties. Moreover, until recently the authorities had not given clear instructions on how and from whom to collect payments. Notaries quietly "sabotaged" the new law, hoping that "things would somehow change," and real estate agencies also recommended that clients wait with buying and selling.
NEW RULES OF THE GAME ON THE REAL ESTATE MARKET
Sale of property acquired before January 1, 2004 When selling real estate that was owned by an individual before January 1, the income received by the taxpayer is taxed at a rate of 1% of the property value (specified in the purchase and sale agreement, but not lower than the assessed value), if the total area of the house or apartment does not exceed 100 sq. m. If the area of the property is more than 100 sq. m, then the part of the income proportional to the amount of such excess is taxed at a rate of 5%.
If you sell more than one real estate property during the year, then income from the sale of the second and subsequent properties is taxed at a rate of 5%. Income from the sale of unfinished construction and other non-residential properties is taxed at the same rate.
Sale of property acquired after January 1, 2004 For such a transaction, you will have to pay 13% (from 01.01.2007 - 15%). Moreover, the seller's profit is taxed, namely the difference between the income received from the sale of the property and the expenses for its acquisition (construction). This amount is reduced by 10% for each year of ownership of such real estate.
At the same time, the amount of tax cannot be less than the minimum wage established by law at the beginning of the year (in 2005 - UAH 262). Income from the sale is determined on the basis of the price specified in the purchase and sale agreement, but not lower than the assessed value of the real estate.
How much to pay for inheritance? 0% - if the property is inherited by the other spouse; 5% - if the property is inherited by a first-degree family member of the deceased who is not their spouse (for example, father - son), but not more than one hundred times the minimum wage; 13% (from 01.01.2007 - 15%) - if the property is inherited by other heirs; 26% (from 01.01.2007 - 30%) - if the property is inherited from a deceased person who is not a citizen of Ukraine.
When it comes to a gift agreement, the same tax rates apply as for inheritance taxation.
HOW TO GET AROUND IT?
Practically impossible. These days, tax officials and the Ministry of Justice published detailed explanations regarding the rules of the game on the real estate market. Notaries have now been given their rights and obligations. Property valuation, as before, is carried out by the BTI, and notaries will still calculate the tax. If a person does not pay the tax, then it will be paid by ...the notary. In addition, they will also pay a fine (double the amount of unpaid tax), and will not make claims against the seller of the property.
Notaries say that now it may be more profitable to conclude gift agreements using the GRANDFATHER - SON - GRANDSON scheme than directly GRANDFATHER - GRANDSON. In the first case, the tax rate will be 5% + 5%, in the second - 13% (from January 1, 2007 - 15%), although you will have to pay twice for drawing up the agreements. Therefore, the participants in the transaction must carefully consider how exactly it is more profitable to conclude the agreement.