Immovable property tax: who has to pay, how much, and why

Since the beginning of the summer people started receiving tax notifications for the payment of immovable property tax (for apartments, houses, etc.). The question arises: who has to pay this tax, how much has to be paid, and why? So, what you should know about the immovable property tax.

Who has to pay?

This tax is paid by owners of real estate: apartments with a total area of more than 60 square meters, residential buildings of more than 120 square meters, non-residential and commercial real estate.

What is taxed?

The total area of an apartment which is more than 60 square meters and houses of more than 120 square meters are subjects to taxation. That is, if the area of your apartment is 65 square meters, then the tax will be charged only from the 5 sq. m. Other benefits related to this tax are applied by decisions of the relevant local councils and may vary depending on the locality. For example, Kharkiv city council decided that apartments are not taxed unless their total area is bigger than 85 sq. m.

How much to pay?

Tax rates vary in different localities of Ukraine, because each local council determines the tax rates on its territory itself, depending on the type of real estate and its location. However, the tax rate for 1 square meter of immovable property cannot exceed 1.5 percent of the minimum wage at the beginning of the reporting year (1.5% of 3,200 hryvnias as of 2017 for 1 square meter). Information on the rates of local taxes and fees can be obtained from the local State Fiscal Service office and/or on the websites of village, town, city councils or councils of joint territorial communities. For example, in Kyiv, Chernivtsi, Lutsk for 1 square meter beyond the statutory beneficial limit provided for by the law – 1% of the minimum wage  should be paid; while in Lviv, Zhytomyr, Rivne – it is 0,5% of the minimum wage. However, each settlement can have its own decreasing coefficients or peculiarities. For example, in Kyiv an additional reduction factor has been introduced, and in Chernivtsi there are different tax rates for the owners of apartment of different sizes: the larger the area – the greater the rate.

Who can receive benefits?

When establishing benefits for individuals, local councils can take into account not only the type of property, but also the property status and level of income of a person.

When the benefits don’t apply

Benefits for this tax are not applied if the property is used by its owner to generate income (rent, leasing, loan, business, etc.), or if the area of the object exceeds five times the size of the non-taxable area (for an apartment – 60 sq. m.*5=300 sq. m., and for the house – 120*5=600 sq. m.).

Are there any tax exemptions?

 

There is immovable property that is not levied by law: these is, for example, property belonging to large families or foster families, children’s health camps, sports schools, centers of physical health and the like.

Real estate in the temporarily occupied territories and/or in the settlements located at the contact line and/or in the so-called “territory of the ATO” is not subject to the taxation between April 14, 2014 and December 31 of the year in which the ATO is completed.

What is the deadline for paying the tax?

The Tax Office was supposed to send tax notices to the citizens owning real estate before July 1 of this year, indicating the amount of tax and the details of its payment.

The tax is to be paid within 60 days from the date of delivery of the notice. That is, by August 29.

What to do if it is not clear what the tax is levied for?

You have a right to send a written appeal to the Tax Office and verify the size of the property area, the right to a benefit, the amount of the tax rate, the accrued sum of money. Of course, this creates additional inconvenience for all of us.

If the state were interested in filling the budget and paying taxes, it should have properly performed the service function for taxpayers, should have provided a detailed calculation in the tax notification with all the necessary information.

It’s not the first time I’m talking about this, however, this year I decided to send a deputy request to the Ministry of Finance asking to ensure at the executive level the creation of a clear and convenient way of informing the tax payers, or even better – to introduce a tax calculator on the website of the State Fiscal Service where the payers can log in, indicate their location, the type and area of their immovable property, and get information about the tax rates, benefits, and a detailed calculation of the amount to be paid. In the meantime, we all have to spend our time finding out what we are paying for. I should note that in case of identifying discrepancies between the amount of payment calculated by the Tax Office and by the taxpayers themselves, the tax amount will be recalculated.

What will the money collected from the real estate tax be spent on?

All taxes in Ukraine are divided into country-wide ones, which are paid to the central budget, and local ones, which are paid to local budgets and are spent by communities on their local needs.

The immovable property tax is a local tax; therefore, each local council has to spend its budget on meeting the needs of its local community: repairs of schools, streets, street lighting, garbage collection, landscaping, schools and kindergartens.

Therefore, the amount of money your local budget will receive to ensure a decent life for the community depends on whether you and your neighbor have paid the property tax. People have to control local officials and their effective use of public funds.

If the local authorities buy light bulbs every month and your street has been dark for a year, this is a serious reason to raise the issue of misuse of funds.

If you cannot get the information about the incomes and expenses of your local council on your own, contact local Samopomich offices and we will write a request and help you sort things out. Officials cannot control themselves, we must do this ourselves if we want to live in a prosperous Ukraine.

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