By mid-2026, Ukraine's tax system faced a serious challenge: revenue from real estate taxes, despite a massive taxpayer base, remained critically low. In the first six months of the current year, local budgets received about 6.1 billion hryvnias from this tax. As experts note, this accounts for only 2.2% of all revenue flowing into the country's decentralized budgets. In fact, one of the most stable sources of income for municipalities is working at a loss due to an outdated calculation methodology.
Disproportion between Area and Value: The Problem with the Current Model
The taxation system existing in 2026 is based exclusively on the area of the property. According to current legislation, owners of housing exceeding the preferential norm are obliged to pay a tax of no more than 1.5% of the minimum wage for each square meter of excess. Preferential limits are set at 60 sq. m for apartments, 120 sq. m for private houses, and 180 sq. m for the total area of an apartment and a house.
Daniil Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation, and Customs Policy, emphasizes that such a model creates fundamental unfairness. Owners of properties of the same area pay identical amounts, regardless of whether their real estate is located in the elite center of Kyiv, on a prestigious resort, or in a depressed rural district. "Such an approach does not take into account the real value of the property, creates unequal conditions for taxpayers, and contradicts the principle of fair taxation," the deputy stated in a comment to RBC-Ukraine.
Overdue Reform: The Plan to Transition to Valuation-Based Taxation
The National Revenue Strategy until 2030 included an ambitious plan to transition to taxation based on the assessed value of property. The implementation of this reform was supposed to go through clear stages: development of the assessment mechanism by the State Property Fund in 2024–2025, conducting the actual assessment of objects in the DRRP in 2026–2027, and populating the information base by the end of 2027.
However, as of August 2026, the plan schedule has been violated. The first stage of the reform, which was supposed to conclude with the adoption of a regulatory act on the procedure for property assessment in 2025, is effectively overdue. Although the State Property Fund created a working group and developed a draft Cabinet of Ministers resolution, the key document has not been signed. This puts the entire subsequent process of transitioning to a fair system, which was supposed to be completed by the Ministry of Finance and the State Tax Service in 2027–2028, at risk.
Contradictory Data
The question of who bears the main responsibility for the delay in the reform causes disagreements among experts and officials. On the one hand, representatives of the relevant committees of the Verkhovna Rada point to bureaucratic inertia and a lack of political will to adopt a complex Cabinet of Ministers resolution in 2025. On the other hand, arguments are heard in the expert community about the technical impossibility of conducting a mass assessment of real estate in the conditions of an ongoing war and the lack of up-to-date data on the state of objects in border regions.
Furthermore, there are discrepancies in estimates of potential revenues. The Ministry of Finance predicts that switching to valuation-based assessment could increase revenue to local budgets several times over, however, independent economists warn that this could lead to a sharp increase in the tax burden on the middle class if rates and benefits are not reviewed. For now, the authorities are balancing between the need to fill the budget and the risk of social tension.
What Awaits Homeowners in the Coming Years
For ordinary Ukrainians, the current situation means the preservation of a "flat" tax rate, which does not reflect the real value of their assets. If the reform is launched according to plan in 2027, owners of elite housing should expect a significant increase in tax obligations, while owners of modest housing in rural areas may receive a reduction in the burden. However, until new rules are adopted and the cadastral assessment is completed, the system will remain the same, which, according to deputies, is an inefficient use of local self-government resources.
