If the payer inherited land plot and plan to sell it, in some cases income from such sale is not taxed. Tax Code of Ukraine provides for a benefit.
Taxes are not paid if two conditions are met simultaneously:
- sale is carried out not more than once during the calendar year;
- plot area does not exceed norms of free transfer determined by the land legislation.
Important: requirement to be in the ownership for more than three years does not apply to inherited land plot. That is, it can be sold immediately after registration of the ownership right and if there are grounds to take advantage of the tax benefit.
Benefit applies, particularly to the land plots:
- for personal farming – up to 2 hectares;
- for gardening – up to 0.12 hectares;
- for individual summer cottage construction – up to 0.10 hectares;
- for household plots – within the limits of norms specified by the Land Code of Ukraine.
Example
Citizen inherited land plot of 1.5 hectares for personal farming and sold it for 400 thousand UAH.
Since the plot area does not exceed established norm of 2 hectares, and sale takes place for the first time during the year, income from the sale is not taxed. Seller receives the entire amount of funds.
When taxes need to be paid
If the land plot area exceeds established norms or object does not fall under the scope of benefit, income from the sale is taxed:
- personal income tax – 5%;
- military levy – 5%.
It is also worth considering number of the real estate sales transactions during the year. If this is the second real estate object being sold, taxation procedure may differ.
Before concluding purchase and sale agreement, it is recommended to check area of the land plot and conditions for applying tax benefits. This will help determine in advance whether there will be obligation to pay taxes and what their amount will be.