Sale of inherited land: when taxes do not have to be paid
Income from the sale of inherited land may not be subject to taxation. This is possible if two conditions are met simultaneously: the land plot is sold no more than once during the calendar year, and its area does not exceed the free transfer limits established by land legislation.
As explained by the State Tax Service, the requirement to own inherited land for more than three years does not apply. This means that such land can be sold immediately after the ownership right is registered if there are grounds for applying the tax benefit.
The benefit applies, in particular, to land plots:
- for personal farming – up to 2 hectares;
- for gardening – up to 0.12 hectares;
- for individual country house construction – up to 0.10 hectares;
- for household plots – within the limits defined by the Land Code of Ukraine.
As an example, the State Tax Service cited a situation where a citizen inherited a land plot of 1.5 hectares for personal farming and sold it for 400 thousand UAH. Since the area does not exceed the established norm of 2 hectares and the sale occurred for the first time during the year, the income from the sale of such a plot is not taxed, and the seller receives the full amount.
At the same time, if the land plot area exceeds the established limits or the object does not qualify for the benefit, the income from the sale is taxable. In this case, it is necessary to pay 5% personal income tax and 5% military levy.
The tax authorities also emphasized that the number of real estate sale transactions during the year matters. If a second real estate object is sold, the taxation procedure may be different.
As previously reported by Judicial and Legal Newspaper, an heir whose right to inheritance arose due to the refusal to accept the inheritance by another heir has the right to refuse acceptance of the inheritance within a special three-month period established by part two of article 1270 of the Civil Code of Ukraine, which is calculated from the moment of such refusal, and not within the general six-month period from the opening of the inheritance. This conclusion was made by the Supreme Court in the composition of the panel of judges of the First Judicial Chamber of the Cassation Civil Court.
Subscribe to our Telegram channel t.me/sudua and to Google News SUD.UA, as well as to our VIBER and WhatsApp, Facebook page and Instagram to stay informed about the most important events.
