I want to buy a property in Ukraine and rent it out: Where to start?

Today, many foreigners prefer to buy real estate in Ukraine in order to monetise it further - for example, to rent it out. Today we will tell you how to approach the issue of safe purchase of real estate in Ukraine, whether anything has changed in the procedure for foreigners, and how to legally formalise your further actions with real estate.

To begin with, you will probably be looking for a realtor to look for a flat. Bear in mind that a realtor is not responsible for the legality of the transaction. Their job is to find a property that suits your needs. A realtor will not be able to check it for legal security. Here are some simple rules to make sure your real estate investment is safe.

Related article: Is it possible to buy an apartment in Ukraine during the war?

If you are planning to buy a property on the primary market - in a new house or a building under construction

Here is a list of factors that should immediately alert you:

• construction exceeds the originally announced deadline - builders sometimes do not complete construction because of real or fabricated financial problems, sometimes the delays can be artificial. For you, this only means waiting endlessly for your property;

• the builder does not want to give you the construction documents - the house may be built with deviations from the building standards which are partly or completely beyond repair. This is difficult to check without an expert, but the refusal itself should serve as a signal to you;

• complicated scheme of buying a flat - if it is a first-time purchase of a home, you should be the first owner. Make sure that the flat has not been resold several times before you;

• absence of building permits from the developer. Yes, it sounds crazy, but it can happen, which makes it impossible to commission such a property, or it provokes long-term problem solving and litigation.

There are many ways and sources where you can get information about the property you are interested in. For example, the State Register of Immovable Property Rights, the Town Planning Register, the State Architecture and Urban Planning Inspectorate, etc.

Checking a flat in a new building should include:

• checking of the developer and related companies;

• checking of building permits and the legality of the construction;

• checking the land on which the new building is being built;

• checking the terms of the contract you are being asked to sign.

Such a check takes only a couple of days for our lawyers, and for you it is a guarantee of preserving a large investment.

Related article: How to sell an apartment in Ukraine: issues of money transfers and recovery of lost documents

If you are planning to buy a second-hand property

Here are the first things to check if you are planning to buy a flat that has already had owners before you:

• the actual ownership of the flat;

• the existence of liens placed on the property;

• any litigation against the landlord, including where the flat is the subject of a dispute;

• existence of unapproved alterations to the property;

• Any debts, such as utility bills

• whether there are no people registered in the flat who are not involved in the transaction.

This check is also carried out on a large number of registers. A trusted notary can also be of help here. So we ask our partner notary to check some of the information. 

The alarm bells, once the information has been collected, are:

• removal of the seizures shortly before the flat is offered for sale;

• Inheritance of the flat by the seller, subject to the possibility of other legitimate claimants or theoretical litigation.

Important: If the flat is jointly owned by spouses, a second spouse or a notarised power of attorney from the spouse will be required to be present at the transaction.

Related article: How to check the seller of the real estate in Ukraine?

What taxes will I have to pay if I rent out my property in Ukraine?

When you rent out real estate in Ukraine. you receive income. This means that you have to pay income tax. The standard rate is 18% tax and 1.5% tax as income of an individual when renting out the property. But today in Ukraine there are special agencies that mediate in this process and significantly reduce the tax paid.

It is also always possible to register a Sole proprietorships, as ones in Ukraine under the simplified system, in such a situation pay comparatively less - the percentage depends on the registration group: 

• Sole proprietorship on group II pays a fixed amount of tax + 20% of the minimum wage every month (in 2021 it is 6000x20%=1200 UAH, for the year -14400 UAH) + unified social contribution (USE), which is equal to 22% of the minimum wage (6000x22%=1320 UAH). 

• Sole proprietorship in group III - 5% and ERU.

In any case, it is important not only to optimise the amount of tax, but also to take care not to pay such tax twice - also in the country of residence. 

To avoid double taxation, a certificate from the Ukrainian fiscal authorities must be obtained. 

We will help you not only to check the property, its owners and the contract itself before you buy it, but also to make sure that your money is invested profitably so that the property does not get you into trouble later on.

You can find out the cost of our services here.