According to the draft budget and tax policy for 2027, an individual will be able to prove that a property is their primary residence if they have been registered there for at least three years or if, during that same period, it was the only property owned by the individual.
These changes simplify the application of the tax exemption when selling a primary residence and make the rules clearer for taxpayers.
It is also proposed to change the mechanism for calculating capital gains. Currently, only 50% of the capital gain is included in taxable income. The draft bill provides for the elimination of this exemption, as a result of which the entire capital gain will be taxed at a rate of 12%. In other words, the tax base will double.
At the same time, citizens’ expenses for the repair and modernization of real estate may be taken into account. The Ministry of Finance proposes including them in the tax base.
To do so, the owner will have to submit tax invoices as well as documents confirming payment. This will allow for a more accurate determination of the actual capital gain upon the sale of the property.
The draft also changes the procedure for reporting capital gains. Whereas previously, in certain cases, legal entities withheld tax at the time of the transaction, the responsibility for calculating, reporting, and paying the tax will now fall on the individual.
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