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Tax evaders risk property when renting an apartment

By May 1, 2015, it is necessary to submit declarations of property status and income received in 2014, indicating, in particular, income from the rental of real estate. The percentage of people who show this type of income and pay taxes from them is very small.

According to experienced housing dispute attorneys, renting an apartment is regulated by articles 319 and 320 of the Civil Code of Ukraine, according to which the owner owns, uses, disposes of his property at his discretion, including for carrying out entrepreneurial activities. Quite often, citizens of Ukraine forget that the mentioned source of income is taxable. Article 170 of the Tax Code defines the features of accrual and taxation of income from the provision of real estate for rent (sublease), housing rental.

Namely, the landlord, who rents the apartment to individuals and is not an entrepreneur, after each quarter within 40 days, you must calculate the tax and pay. If a month’s income is less than UAH 12.180, then you need to pay 15%, more than 20% of the amount of income.

The main threat to the landlord is that the fact of “unofficial” leasing of housing to them will be proved. Then he will have to pay a fine of 17 to 34 thousand hryvnia, in accordance with article 212 of the Criminal Code of Ukraine.

Relevant in the context of this topic is the issue of immigrants from the ATO zone. To receive a certificate from a temporarily displaced person, they must indicate the address at which they live and receive a note from the migration service. In principle, if the relevant authorities transfer this information to the tax authorities, then fiscals may have the assumption that immigrants live on a rental basis. And then questions arise to the owners of such apartments. To prove that the apartment is for rent and at what price is not so simple, but it can create additional problems for landlords.

But, if we are talking about the introduction of European standards, then official renting is the normal practice of all civilized countries. Let’s not forget that a common drawback of the shadow residential real estate market is the lack of funds from local budgets.

According to rough estimates by real estate market experts, about 90% of the rental property is in the shade. In particular, the budget of Kiev does not receive taxes on hundreds of millions of hryvnias annually. The problem of the shadow market for rental residential real estate is solved. First, you need to create an open registry of housing offered for rent. Secondly, you need to reduce the tax rate for income from the provision of housing for rent.

Today we are witnessing how the government is trying to squeeze money out of people as much as possible. Even the seemingly noble procedure for providing subsidies implies the need to indicate in the declaration the income of individuals from the rental of property. As soon as a person tries to claim a discount for a communal apartment, fiscal authorities will immediately charge a tax on income from the activities of the lessor. It is necessary to change approaches to solving the problem where the priority will be not filling the budget at the expense of ordinary citizens and setting a significant percentage of the tax, but protecting the rights and interests of those who rent and rent housing.

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