FEATURES OF TAXATION OF RENTAL OF REAL ESTATE

 The obligation to pay taxes for own housing, which is rented out, is regulated by the Tax Code of Ukraine. However, such an obligation is imposed on both the individual and the private individual or legal entity. In this case, each individual must submit a declaration at the end of the year, indicating the income received from the lease of real estate.

 When concluding a real estate lease agreement, whether it is commercial real estate or residential construction, a written agreement must usually be entered into. However, the law does not provide for the obligation for individuals to enter into such a contract notarized. It can be concluded in a simple written form, but contain the main (essential) conditions: term, subject, price and other conditions determined by the parties.

 The Tax Code of Ukraine does not stipulate the obligation to receive such payments to the account. This can be the usual cash payment for everyone. However, they must be clearly stated in the contract. Currently, the State Tax Service of Ukraine does not have a single register with information on rented housing or where such agreements are registered.

 The obligation to pay taxes for individuals is standard, ie 18% plus 1.5% of the military tax. At the same time, for late payment of taxes, individuals bear the risk of paying penalties, including 10% of the amount of late payment of tax liability (30 days overdue payment) and 20% (overdue payments over 30 days).

 In addition, if you use the services of realtors, brokers or other intermediaries in this area, it is worth remembering that such organizations are required to report each lease agreement entered into with their participation in the State Tax Service.

 In the declaration, the individual indicates a clear amount of income received from the lease of property and the total amount of tax liability.

 As for Entepreneur, the situation is somewhat different. Private individuals are considered business entities and therefore pay taxes in accordance with the chosen taxation system. At the same time, the sole proprietorship must have an appropriate classifier of the type of economic activity, namely NACE 68.20. Regarding taxation, a sole proprietorship that leases real estate may be located at:

General taxation system and pay 18% of profits (income minus expenses) and a single social contribution for yourself;
Simplified taxation system:
A) 2 groups and pay up to 20% of the minimum wage and SSC for themselves, monthly;
B) 3 groups and pay 5% of income and SSC for yourself, monthly.

It is worth remembering that a sole proprietor of the 2nd group cannot lease property to legal entities under the general taxation system.

 For legal entities, the general rules of corporate income tax, VAT or single tax of the 3rd group are used.

 In order to avoid unnecessary tax liabilities or penalties, contact the lawyers of the law firm "Prikhodko and Partners", we will be happy to tell you about all the intricacies of taxation.