Ukraine is preparing a large-scale tax reform aimed at lowering the tax rate on rental income, exempting from taxes those landlords who provide housing to internally displaced persons, and simplifying the legalization of rental agreements. It is expected that this will significantly reduce the shadow sector in the real estate rental market and strengthen the protection of rights for both landlords and tenants.
This is reported by Finway
Informal Rentals: Risks and Losses for Both Parties
Most rental agreements in Ukraine—over 90%—are made informally. This allows landlords to avoid paying taxes while tenants pay less. However, such practices deprive both parties of legal protection. The absence of an official contract means that tenants cannot claim compensation in case of damage or loss of the property, cannot register their place of residence, or access state support, especially for internally displaced persons (IDPs). Landlords, in case of disputes, find themselves in a legal vacuum.
“Both the person renting the apartment suffers, as their rights are not protected, and the one providing it for rent,” emphasized Shulyak.
Main Changes and Prospects of the Reform
The Ministry of Community and Territorial Development is developing amendments to the Tax Code. Among the key proposals are: lowering the tax rate on rental income, complete tax exemption for owners renting to IDPs, abolishing mandatory declarations in such cases, and simplifying income accounting. The reform aims to create a transparent and understandable tax system that will encourage apartment owners to legalize their activities.
According to official statistics, in 2024, only 900 citizens declared rental income totaling 16 million UAH, which provided the state budget with less than 3 million UAH in taxes. This indicates a low motivation for legalizing agreements against the backdrop of a large real market.
The importance of protecting the rights of IDPs is also highlighted. The planned changes will allow them to officially register their place of residence, receive state assistance, and claim compensation. The ministry emphasizes that simplifying the legalization of rentals will also ease access to state support for displaced persons.
Experts believe that the new tax model could be an effective means of combating shadow schemes and also offer favorable conditions for property owners who previously feared bureaucracy or high taxes. It is expected that after the implementation of the reform, the share of official contracts will increase, and the market will become more stable and secure for all participants.