As per the current provisions of the law “On Personal Income Tax”, physical persons are required to pay tax on income derived from the sale of real estate (capital gains tax). The difference between the cost of the purchased real estate and the sale price is subject to tax. If a property has been inherited, the value of its acquisition is the value of this particular property indicated in the inheritance certificate.
According to the general rules of conducting inheritance cases, if the inheritance includes real estate, its value is determined by the cadastral value established by the State Land Service.
It is no secret that as a rule, the cadastral value of the real estate is much lower than its market value. And the heirs who have inherited the property at the cadastral value, having then sold it at market value, are forced to pay a large amount of capital gains tax.
However, there is an absolutely legal way how to reduce the sum of the tax very few people know about.
So, if the heir is not satisfied with the real estate assessment based on the cadastral value, then he or she has the right to determine the value of the property themselves. To do this, a person just needs to submit an appropriate application to the notary in charge of the inheritance case. The statement must contain the value of the property according to which the heir wants to inherit the property. And that’s it! No need to order or perform any official assessments, the law simply does not require it.
Thus, the cost of acquiring an inherited real estate can be approximated or evened with its market value and, as a result of the further sale of real estate, it’s possible either to eliminate the tax altogether or to minimize it substantially.