Registration of land plot donation is not only a legal procedure, but also a matter of correctly determining its value and paying taxes. It is important to know: for taxation of donated land, it is the expert monetary evaluation that is used, not the regulatory one.
Legislation of Ukraine clearly distinguishes between two types of monetary land evaluation:
- Normative monetary value – is used, in particular, for calculating land tax, rent for state and municipal land, state duty in certain cases of inheritance, donation and exchange.
- Expert monetary evaluation – determines real value of land plot and rights to it. It is used for concluding civil law agreements with land, as well as to determine value of donated or inherited land plot for taxation purposes.
Who and how much does tax pay receiving land as a gift or inheritance?
If you are given land or inherit it, amount of tax you have to pay depends on relationship degree to the donor or testator.
If you received inheritance or gift from close relatives of the first and second degree of relationship (parents, spouse, children, siblings, grandparents, grandchildren) – tax is not paid.
From all others (distant relatives, friends or acquaintances) – it is needed to pay 5% tax of the property value upon receipt.
What evaluation to take for tax purposes?
For the personal income tax purposes, value of land plot as object of donation or inheritance is subject to the expert monetary evaluation only.
That is, for the Tax Service to correctly calculate this 5%, official expert conclusion on the market land value will be needed.
Therefore, if there is a plan to give land plot as a gift or receive it as a gift, take care of conducting expert evaluation in advance. This will help to correctly determine tax base and avoid misunderstandings during execution of the transaction.