Taxes When Selling Property in Ukraine

The amount of tax on a property sale depends on three things: how many properties you sell within a year, how long you have owned the property, and your tax status. A mistake in the calculation only comes to light at the notary during the transaction, when it is too late to change anything.

When there is no income tax

The first sale of residential property in a calendar year is not subject to personal income tax, provided the property has been owned for more than three years. This is the basic rule that covers most ordinary transactions.

The three-year rule does not apply to inherited property. An inherited apartment can be sold without this tax even sooner, as long as it is the first sale of the year.

When tax applies

The second and every subsequent sale within a single calendar year is taxable. The sale of a property owned for less than three years is likewise taxable, unless it was inherited.

The rate differs for a resident of Ukraine and for a non-resident, and it is higher for a non-resident. Tax status is determined not by citizenship but by place of residence and center of vital interests, and this is a question worth clarifying in advance.

Military levy

The military levy is paid in the cases where personal income tax arises. It is calculated on the same base, that is, on the transaction amount or the appraised value, whichever is greater.

This is a common reason for a mismatch in expectations: the seller counted only the main tax and did not budget for the levy.

On what amount the tax is calculated

The base is the contract price, but not lower than the appraised value. That is why an appraisal of the property is mandatory and must be carried out by a certified appraiser before the transaction.

Attempting to understate the amount in the contract does not work: the notary checks it against the appraisal and will not certify a transaction below that value. In addition, an understated amount in the contract is a direct risk for the buyer if the transaction has to be challenged.

Who pays and when

The tax is paid before the notarial certification of the contract, that is, before the transaction, not after. The notary acts as a tax agent and will not certify the contract without confirmation of payment.

The allocation of costs between the parties is a matter of agreement. As a general rule, the mandatory contribution to the Pension Fund is paid by the buyer, and the personal income tax by the seller. The arrangement is recorded in the preliminary contract, so that it does not have to be sorted out in the notary's office.