Buying a real estate by a foreigner (non-resident) in Ukraine
Non-residents have the same rights to purchase various types of real estate as well as residents of Ukraine, with some exceptions.
Restrictions on the acquisition of real estate by non-residents under Ukrainian legislation.
There are restrictions for non-residents in Ukraine on the purchase of land plot for a specific purpose.
1) Foreigners can not own agricultural land. Even if such land plots were received by them in the inheritance, within a year the foreigner should alienate it.
2) Regarding non-agricultural land plot, here is a slightly different situation. Non-residents individuals have the right to purchase such land plot within populated areas, as well as outside settlements, if on this land plot there is immovable property owned by non-resident-individual. Non-resident can acquire such land plot under a civil law contract. Non-residents can not obtain a land plot or any other real estate on the territory of Ukraine by free privatization.
Non-residents legal entities can purchase a land plot in two cases. They can buy such non-agricultural land plot within populated areas in case of purchasing real estate and for construction of objects related to the implementation of entrepreneurial activities in Ukraine, or land plots outside settlements in case of purchasing real estate on it.
3) There are features of purchasing state or communal land plots by non-residents – legal entities. For example, non-resident legal entity must have a registered permanent establishment on the territory of Ukraine.
Advantages for non-residents provided by the purchase of real estate («benefits»).
There are rules in some countries that the purchase of real estate by non-residents gives them the right to automatically obtain residenсe in this country or other «benefits». In Ukraine, such rule does not exist. Often, non-residents purchase apartments in order to obtain permanent residence in Ukraine. However, the purchase of real estate by non-resident is not an immediate basis for obtaining permanent residence.
The possibility of obtaining permission for immigration still exists, but is mediated. In order to have the right to get permanent residence in Ukraine, you must first obtain an immigration permit, in this case on the basis of making a foreign investment in the equivalent of at least $ 100,000. Direct purchase of an apartment for this amount by non-resident is not an investment. Non-resident needs to establish a company in Ukraine (best of all – a limited liability company), to make the authorized capital amounting to $ 100,000 from, then to register the investment and, in due course, to obtain a permission to immigrate (you can read more on this in the article of the immigration lawyer: https://legalaid.ua/ua/article/pmzh-v-ukrajini-na-pidstavi-vnesennya-inozemnoji-investytsiji). The buyer of the apartment in this case will not be a foreigner – an individual. The buyer will be a legal entity, established by this foreigner in Ukraine.
Non-residents often buy residential property (apartments, houses) or invest in housing construction in new buildings. Purchasing real estate in the primary and secondary market by foreigners has its own characteristics.
Purchase of real estate by non-residents in new buildings.
You should pay attention to a number of features that non-resident should take into account.
1) Non-residents must obtain the registration number of the tax payer’s registration card in Ukraine, or as it is called – the identification code or tax code (tax ID), for any real estate transaction. Tax ID is made up to 10 working days in the tax authorities. To do this, the foreigner must make application and provide translation of his passport. Non-resident can get tax ID only personally or through a representative, having issued a special power of attorney to receive the tax ID.
2) Usually, you can book some apartment in new building before purchasing, which gives a certain time for the settlement of all formal moments with the purchase, transfer of funds or legal due diligence. In 90% of cases, the reservation is made by the developer in an oral order. In a few days or weeks at a certain time you conclude the sale-purchase agreement. The payment procedure should be clarified before the conclusion of the agreement. Payment for such apartment is carried out by transferring funds from your bank account to the account of the developer’s company or by depositing cash in the bank’s cash desk to the developer’s account. A cash payment at the developer’s office can not take place. When you make cash through the bank’s cashier, non-resident should have a customs declaration. Non-resident has the right to import into Ukraine through the state border cash in the equivalent of no more than 10,000 euros without a written declaration, in other cases he must declare it to the customs authority.
3) Additional costs for purchasing an apartment in a new building (taxes, registration fees) depend in each case on the sales scheme, which is used by the developer. Usually a certain amount is paid only after registration of the ownership. Taxes in the amount of 2% of the contract price arise only in the event that there is notarized sale-purchase agreement.
4) Purchasing an apartment by non-resident in a new building contains many risks. It is necessary to analyze the agreement, the permission documents, the information about the developer. To analyze all risks, it is better to turn for support to a lawyer (legal services: https://legalaid.ua/ua/article/yurydychnyj-suprovid-kupivli-kvartyry-v-novobudovakh).
Purchase by non-residents of real estate in the secondary market.
The purchase of any real estate (apartment, house or non-residential real estate) from the owner is carried out exclusively through the conclusion of the notarized sale-purchase agreement.
- What do you need from the buyer? You need only passport and tax ID. If non-resident is married, you also need the consent of the other spouse and your marriage certificate. To do this, another of the spouse must be present at the notary office and give their consent. In case of impossibility of personal presence, such consent must be given in the form of a notarized document.
- What do you need from the seller for the transaction? In addition to the title documents, the seller must provide a technical passport, a report on the evaluation of the object, a certificate of the family composition, copies of the passport and identification code.
Note: which documents confirm the ownership?
Take into account that in Ukraine at different times the right of ownership of real estate was certified by various documents. Since November 2016, ownership is certified by Extract.
From January 1, 2016 and until November 2016, persons who purchased real estate, received an ownership document in the form of information sheet from the State Register, without signing and printing, without using a special form.
From 2004 to 2015 the owners received Extracts from the Register, that certify the ownership right.
In addition, there were other documents. If the owner purchased the property during this period, then in addition to extract, he must have an ownership certificate or another document as the basis for acquiring the ownership (for example, a sale-purchase agreement).
How to check the ownership of an object online? For any real estate registered since 2004, you can get an information sheet from the Register under the link (https://kap.minjust.gov.ua/services?product_id=1&is_registry=1&keywords=&usertype=all), which contains information about ownership. You can use as search parameters the real estate address or owner data, if any. Information from the register is paid (now it is 23 UAH). By results you receive a certificate in PDF format. Such certificate will contain the basic information on the ownership of the object, the available prohibition of alienation or a mortgage.
The following points, which you should pay attention to.
1) Payment procedure. According to the current legislation the maximum amount of settlements between individuals in cash is UAH 50,000. The parties of the agreement often avoid this. The reasons for this avoidance of non-cash settlements is the lack of responsibility for this, the lack of a notary’s duty to control the settlement of the parties.
2) Registration of ownership. As a result the buyer must receive certain documents: the originals of sale-purchase agreement, technical passport, the Extract from the Register of rights to real estate.
3) What are the additional costs? Taxes for non-residents are no different from those for residents, namely 1% of the contract amount is paid as a state fee and 1% as a mandatory pension insurance fee. Registration services and notary services are paid separately.
4) Do you need a preliminary agreement? Often the main contract is preceded by the conclusion of a preliminary contract, under which a «symbolic» advance of $ 500-1000 is transferred. In accordance with the legislation such contract must also be notarized. The parties often refuse notarization. Therefore, they conclude a preliminary agreement in a simple written form. It is necessary to draw up such agreement with the help of lawyers.
It is better to check all the necessary documents, get information about all the risks. The verification options are given in our article https://legalaid.ua/ua/article/yurydychnyj-suprovid-kupivli-kvartyry-na-vtorynnomu-rynku.
Alienation of the property by non-residents.
Non-residents can sell their real estate without any special order. In such case a notarized sale-purchase agreement is concluded. However, for non-residents, if the real estate is owned by non-resident less than three years or if it is not the first object sold during the year, and also if these are non-residential premises, special tax rates have been established. The amount received under such agreement is subject to taxation at the rate of 18% of the contract price as a personal income tax and 1.5% as a military fee, while similar taxes for residents of Ukraine are 5% and 1.5% respectively.
Tax on real estate.
Taxation of real estate tax on immovable property owned by non-residents does not differ from that for residents of Ukraine.
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