Owners of the real estate damaged as a result of hostilities may not pay tax on real estate other than land plot.
Conditions depend on the essence of damage, and the key information is entered in the State register of property damaged and destroyed as a result of hostilities, terrorist acts and sabotage caused by russia’s armed aggression against Ukraine (hereinafter – Register).
If property needs major repairs or reconstruction
Tax is not accrued or paid for damaged residential and non-residential real estate that requires major repairs, reconstruction or restoration.
Benefit validity period:
Beginning: from the 1st of month in which damage is recorded in Register.
End: until the 1st of month following the month in which facility was repaired and declared suitable for habitation or use for its intended purpose.
It is important for application of this rule that the damage must be recorded in Register.
Procedure for submitting information on damaged and destroyed real estate is determined by Resolution of the Cabinet of Ministers of Ukraine № 380 as of 26.03.2022. It applies to individuals and legal entities whose real estate was damaged or destroyed as a result of war starting from February 19, 2014.
Property damage categories
Legislation distinguishes between damaged and destroyed property.
Damaged property is considered to be object that can be restored through repair or reconstruction.
Destroyed property is object that has become unfit for use for its intended purpose, and its restoration is impossible or economically inexpedient.
Damage categories are defined separately:
- category І – objects with the damage degree of approximately 40%, which only require current repairs;
- category ІІ – objects with the damage degree of approximately 41 – 80%, requiring major repairs or reconstruction;
- category ІІІ – objects with the damage degree of 81 – 100%, which are unusable and require dismantling (liquidation).
Owners of damaged real estate of category II or III have a right to apply for tax benefit if there is relevant information in Register.
For objects of category II, their operation must also be suspended for a period of major repairs, reconstruction or restoration.
What happens after property renewal
After property is restored, the liability is renewed.
If property or part of it is repaired and put into operation, the owner must pay real estate tax again.
If the damage is minor
Different mechanism applies to the real estate that has suffered minor damage as a result of hostilities, but remains suitable for habitation or use for its intended purpose and only requires current repairs.
In such case, village, town, city councils, military administrations or military-civilian administrations have s right:
- set the real estate tax rate at a lower rate than the established amount for relevant type of the real estate in this territory;
- completely exempted from paying the tax.
That is, the tax exemption or reduced rate does not apply automatically.
Owner should check decision of relevant local council or military administration.
Taxpayers can also contact local government or military administration to determine appropriate rate for the damaged property.
Such decisions enter into force from the date of their official publication, unless the later date is established.