Ukraine is preparing a tax reform that should reduce the rate on rental income, exempt owners who rent housing to displaced persons from taxes, and simplify the legalization of transactions. If the changes are adopted, shadow rent may be sharply reduced, and the rights of tenants and landlords may be strengthened. This was stated by the head of the Verkhovna Rada Committee on the Organization of State Power, Local Self-Government, Regional Development and Urban Planning Olena Shulyak during a telethon. More than 90% of housing rental agreements in Ukraine are concluded unofficially.
At first glance, unofficial rent seems convenient for both parties, because the landlord avoids taxes, and the tenant pays less. However, at a critical moment, such an agreement can turn into serious problems. Without an official agreement, the tenant has no right to:
compensation in case of damage or loss of housing;
registration of the place of residence;
receiving state assistance, in particular for internally displaced persons (IDPs).
At the same time, the homeowner also runs a risk, because in the event of a dispute with the tenant, he finds himself in a legal vacuum. “Both the person who takes the apartment, since his rights are not protected, and the person who rents it out suffer,” Shulyak emphasized. According to Shulyak, the Ministry of Community and Territorial Development is already working on amendments to the Tax Code. The main goal is to reduce the tax burden and simplify the legalization of transactions. Among the key proposals:
reducing the tax rate on rental income;
complete exemption from taxation when renting housing to displaced persons;
abolition of mandatory declarations in such cases;
simplified accounting of income for owners.
The Ministry of Development explains that the reform should create a clear, transparent and profitable taxation system that will encourage apartment owners to come out of the shadows voluntarily. According to the Tax Service, in 2024, only 900 citizens declared rental income in the amount of UAH 16 million. This brought the budget less than UAH 3 million in taxes. Compared to the real volume of the market, this is a pittance, which indicates a lack of motivation for legalization.
One of the most important aspects of the reform is the protection of the rights of IDPs. Legalization of rent will allow such people to officially register at their place of residence, receive assistance from the state and apply for compensation. “These changes will also simplify the provision of state assistance to internally displaced persons when renting housing,” the ministry emphasizes.
According to Shulyak, the introduction of a new taxation model can be a blow to shadow schemes, but also a profitable solution for homeowners who are afraid of bureaucracy and high taxes. If tax conditions become more loyal, the share of official transactions will increase, and the market will receive additional stability and protection of the rights of all parties.
