New Internal Revenue Code influences the market of real estate.

New Internal Revenue Code influences the market of real estate

According to chapter 14, paragraph 2.2 of the Internal Revenue Code of Ukraine such business as rental of real estate or any other area is not included to the list of actions, which are allowed to be preceded under the fixed tax. This means that both individual and legal person will be obliged to 15% percent from their profit to the government. In comparison: fixed tax included a payment of 200 grivnas (approximately 25 dollars) per month. You should not have to be a specialist in order to realize that it will certainly lead to the increase of the price for rent of flats and other living and commercial areas. As a result such popular sphere of this market as daily rentals will become not in demand any more as it will cost a fortune. The supply of such services will be falling down rapidly.

There is another disadvantage of chapter 14 of the Internal Revenue Code of Ukraine. Judging by the predictions of economists and specialists in the sphere of real estate the major part of this business will turn out to be a shady business. And it is no surprise as no every person will be able to afford such a high tax rate, especially if it is the only source of income. As a result there is no purpose of such change as the government will not reach the target it has set. However it will be forced to strengthen the monitory system in order to follow up all the segments of the rent market which is not possible. This is due to the fact that because of the crisis a lot of former businessmen and managers started to offer rentals after losing their permanent job. This means that the number of those who run small scale business is really hard to imagine. Needless to say that such a high tax rate will put them in a tight corner. That is the main reason why such kind of business will surely become shady. No one wants to live from hand to mouth.

And of course this change will lead to the fact that it will become a real problem for guests of our country to find a descent and cheap accommodation for several days. No matter if you are going to visit our capital as a tourist or you are going make a business trip around Ukraine you will face a lot of difficulties in finding an agency or an individual which offers a daily rental. This means that you will have to pay extra money for hotel rooms which are not as convenient as major apartments, which are offered as accommodation. So be ready to the fact that offers in the sphere of rent of apartments will decrease soon enough.