After Privatization, a Dormitory Room Effectively Becomes an "Apartment" for Tax Purposes: When You Will Have to Pay
A privatized room in a dormitory does not always exempt from paying property tax. Although dormitories themselves are not taxable objects, after the privatization of the living space, its status changes. In this case, the room becomes private property and for taxation purposes is equated to an apartment. It has become known how the tax base is determined in such a situation and when the owner can use a tax benefit.
When a privatized dormitory room is subject to taxation
The Tax Code of Ukraine provides that dormitories are not objects subject to property tax, other than land tax.
At the same time, the legislation allows citizens to privatize living premises in dormitories owned by territorial communities. This right is provided by the Law of Ukraine "On Ensuring the Implementation of Housing Rights of Dormitory Residents."
After privatization, the living premises become private property of an individual. The transfer is formalized by a certificate of ownership, which is registered with privatization authorities and does not require notarization.
From this moment, the room ceases to be considered only as part of the dormitory. It becomes a separate real estate object, the owner of which can freely dispose of the property — sell, gift, or bequeath it.
Therefore, a privatized dormitory room is subject to property tax, other than land tax.
How the area is determined for tax calculation
Since a privatized room is an isolated living space in a multi-apartment building, for tax calculation it is equated to an apartment.
The tax base is the total area of such a real estate object. This is used to determine the tax amount.
What tax benefit applies to owners
The Tax Code establishes that for apartments, regardless of their number, the tax base for individuals is reduced by 60 sq. m.
Since a privatized dormitory room is equated to an apartment for tax purposes, the same rules for reducing the tax base apply when calculating the tax.
When the benefit does not apply
At the same time, owners cannot use this benefit if the property is used to generate income.
Tax authorities emphasize: this refers to cases when the privatized room is rented out, leased, lent, or used in entrepreneurial activity. In such cases, the tax benefits provided by the Tax Code for individuals do not apply.
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