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Sell property in Russia
Yes, foreigners can sell property in Russia, and the process is generally straightforward. However, there are certain considerations and steps that foreigners must follow to ensure the sale complies with Russian property laws. Here is an overview of the key aspects and steps involved in selling property in Russia as a foreigner:
1. Ownership and Legal Status
- Property Ownership: Before selling property in Russia, the foreigner must have legal ownership of the property. This means that the property must be registered with Rosreestr (the Russian Federal Service for State Registration, Cadastre, and Cartography) and the foreigner must have a valid Title of Ownership.
- Foreign Ownership Restrictions: While foreigners are allowed to sell property, they are still subject to the same restrictions as Russian citizens in terms of land ownership. For example, foreigners cannot sell agricultural land or land near the border. If the property being sold falls under one of these restricted categories, the sale may not be allowed.
2. Taxes on the Sale
- Capital Gains Tax: If you sell property in Russia and make a profit (the sale price exceeds the purchase price), you may be subject to capital gains tax.
- Tax Rate for Residents: Foreigners who have been tax residents in Russia (i.e., those who have lived in Russia for at least 183 days in the past 12 months) are subject to a capital gains tax rate of 13%.
- Tax Rate for Non-Residents: Non-resident foreigners are subject to a higher capital gains tax rate of 30% on the profit made from the sale of the property.
- Exemptions for Long-Term Ownership: If you have owned the property for more than three years and it has been your primary residence, you may be eligible for a capital gains tax exemption on the sale of the property. This applies to both foreigners and Russian citizens, but it does not apply to non-residents who sell properties they own for investment or rental purposes.
- Taxation on Rental Income: If the property was used for rental purposes, any rental income received before the sale is subject to income tax, and you will need to declare and pay taxes on that income.
3. The Sales Process
The process for selling property in Russia is relatively similar for foreigners and Russian citizens. The key steps are:
Step 1: Verify Property Title and Documentation
- Due Diligence: Before listing the property for sale, it’s important to verify that the property title is clean and there are no existing legal disputes or encumbrances. This can be done by checking the cadastral records and confirming ownership with Rosreestr.
- Documentation: Ensure you have all necessary documents in order, including the Title of Ownership, cadastral data (property registration details), and proof of purchase.
Step 2: Find a Buyer
- Real Estate Agents: Many foreigners use real estate agents to help them sell property in Russia. Agents can help you list the property, find potential buyers, and navigate the sales process. The agent typically charges a commission, usually between 1% to 3% of the sale price.
- Marketing the Property: You can also market the property through online platforms like Cian, Avito, or Domofond, or via social media and classified ads. It’s also common to promote the property through expat communities in Russia if you’re targeting a foreign buyer.
Step 3: Negotiate the Sale
- Price Negotiations: Once you find a buyer, both parties will negotiate the final sale price. The terms of the sale are typically outlined in a preliminary agreement (often called a “Letter of Intent” or “Preliminary Contract”) before the final contract is signed.
Step 4: Sign the Sale Agreement
- The final sale agreement (also known as the sale and purchase contract) will outline the terms of the sale, including the sale price, payment terms, and any special conditions. This agreement must be notarized to make it legally binding.
- The sale contract should be written in Russian, as this is the official language for legal transactions in Russia. If you’re a foreigner and not fluent in Russian, you may want to request a bilingual contract or hire a translator to ensure you understand the terms.
Step 5: Register the Sale with Rosreestr
- After signing the sale agreement, the sale must be registered with Rosreestr, the Russian property registry office. This is an essential step to legally transfer ownership of the property to the buyer.
- Both the buyer and seller must submit the necessary documentation, including the sale agreement, proof of payment, and any tax documents (such as proof of payment of the property transfer tax).
- The registration process usually takes 1 to 3 weeks, depending on the region.
Step 6: Transfer of Funds and Property
- Payment: The payment for the property is usually made by bank transfer. It is important to ensure that the payment is fully processed and confirmed before finalizing the sale.
- Transfer of Ownership: Once the property is registered in the buyer’s name and payment is received, the property is officially transferred to the new owner.
4. Practical Considerations for Foreigners Selling Property
- Currency Exchange: If you’re a foreigner selling property in Russia, you may be subject to currency exchange fluctuations when transferring the proceeds of the sale to your home country. Some banks may offer favorable exchange rates, but it’s always worth considering the costs involved in international transfers.
- Legal Support: It’s advisable to hire a local lawyer or a real estate agent who understands Russian property law and can help with the sales process. They will ensure that the sale complies with Russian legal requirements and avoid any potential issues or misunderstandings.
- Non-Residents: If you’re not a resident of Russia, there may be additional paperwork required, such as tax declarations for the sale of property. You may also be subject to higher capital gains tax rates (30% for non-residents) on any profit made from the sale of the property.
5. Selling Property through a Russian Legal Entity
If you purchased property in Russia through a Russian company (legal entity), you would sell the property through the company rather than as an individual. This could be the case if you own commercial real estate or agricultural land, which has restrictions for foreign individuals. Selling property through a legal entity may involve additional paperwork, such as confirming the company’s registration and corporate documents.
6. Tax Implications for Foreigners
- Capital Gains Tax: If you sell a property for more than you purchased it, the difference (profit) is subject to capital gains tax.
- For tax residents of Russia (those who have lived in Russia for at least 183 days within the last 12 months), the capital gains tax rate is 13%.
- For non-residents, the tax rate is 30%.
- Exemptions: If you’ve owned the property for more than three years and it has been your primary residence, you may be exempt from capital gains tax on the sale of the property. Non-residents are not eligible for this exemption.
- Inheritance Tax: If the property is inherited, it is subject to the same property transfer taxes as a regular sale. There is no specific inheritance tax in Russia, but the transfer may still be taxed under property transfer laws.
Conclusion
Foreigners can easily sell property in Russia, provided they adhere to the country’s property laws and regulations. The process involves registering the sale with Rosreestr, ensuring compliance with tax obligations, and following the standard procedures for property transfer. While selling property in Russia is not overly complex, it’s highly recommended for foreign sellers to work with a local real estate agent and lawyer to ensure a smooth and legal transaction. Additionally, understanding the tax implications of capital gains and complying with Russian regulations will help ensure that the sale process goes smoothly.