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There hasn’t been much time for the Russian real estate market to mature. During the Soviet period, the government controlled all assets, and individuals were only granted the right to occupy them according to their place of employment. Consequently, relocating was not an easy task. However, the Russian real estate market came into its own with the Soviet Union’s collapse, allowing Muscovites to sell and purchase houses via privatization. The Russian real estate market is thriving right now. There are a lot of great prospects for both lifestyle and investment, and the rewards are significant. Let’s look at some of the factors that you should consider when buying property in Russia and the process of it.
Who Is Eligible to Buy a House in Russia?
Buying a home in Russia is generally possible for everyone, regardless of citizenship. Foreign nationals are not expressly forbidden from owning private residences inside the nation. For instance, land near state borders or seaports is off-limits to them. As a result, people may purchase a home without owning the ground on which it sits. That implies that tenants’ happiness relies highly on the landlord’s mood.
Groups of people may also purchase residential Russian real estate markets. In this scenario, there will be several owners, and each will have legal ownership over a portion of the property.
What Counts As Residential Property in Russia?
Residential property in Russia is defined in the Housing Code as a piece of legally owned space that is hygienic and safe enough to be occupied permanently (i.e., it satisfies the technical standards set out by the Russian government for residential property).
It may take the shape of an apartment, a home, a portion of a house, or even a room. In Russia, you may still find the most basic kind of communal housing, known as a Kommunalka, owned and lived in by two or more families. An apartment boom has occurred in Russia within the last decade.
While other countries use “apartment” interchangeably with “flat,” Russians do not. In this context, A ” flat ” is a non-residential property in Russia that is more often utilized for short-term stays (as in the hotel industry) than for permanent residence. Initially, they appeared everywhere because people transformed old industrial buildings into living spaces.
These flats are technically not residential since they do not meet the higher sanitary standards of residential properties. Utility and property tax expenses are more expensive when a property is not considered a residence. Furthermore, while individuals are permitted to use flats physically, they are not granted the right to formally dwell there or use them as residence addresses.
By §446 of the Russian Civil Procedure Code, a court cannot deprive a person of their right to exist by seizing their only home property in Russia while deciding on alternatives that the individual must pay (such as in debt recovery or bankruptcy proceedings). Accordingly, the only piece of residential property may remain “intact,” notwithstanding the inevitable arrest and sale of the flat.
Property Cost in Russia
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More than 12 million people are calling Moscow, Russia, home. Except for several annexations, the city is bounded by the Moscow Ring Road (MKAD), which forms a circumference around the city that extends from the Kremlin in the centre to its outermost ring.
The city is further organized into 123 districts inside the okrugs and ten administrative units within the rings.
Listings for Moscow’s Russian real estate market often include the price per square meter in Roubles and sometimes the entire property in Russia price. Apartments in Moscow’s central district may cost as much as 308,500 rubles per square meter, according to recent data from Numbeo, while those outside the centre cost an average of 147,000 rubles.
Moscow is no different from any other city in that the size, location, and kind of property determine the price and your ability to purchase it. Flats in Moscow’s central business district cost a pretty penny. Many places outside the city centre, in affluent and attractive regions close to the Garden Ring, also command a premium price. In addition to large homes, plenty of open space, and convenient transportation, these places also have lush suburbs.
The price tag will increase a little for some of the newer, fancier projects catering to affluent and international investors. Presnensky District (or Presnya) and Sokol are two locations in the Central Administrative Okrug where high-end residences may cost several million Roubles.
Buying Russian Real Estate
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After you’ve located a house that meets all your needs and researched Moscow neighbourhoods, the next step is to consider the logistics of purchasing a home there.
Property History
Because of the potential for challenges to your ownership rights by prior owners or those officially registered in the apartment, you must thoroughly research the property history in light of the ever-evolving Russian real estate market regulations. These things can be avoided if they are known before the real estate deal is made.
Property Cost
In Moscow, it is customary for the buyer to pay for all closing costs, such as those associated with the notary, the state registration, and the bank. A brokerage fee is associated with working with a real estate agent to find a place and negotiate a purchase or sale. This entails searching for a suitable property in Russia, researching the seller and the property in question, reviewing the ownership documentation and any “rights of use” issues, coordinating the closure of the purchase, and overseeing the ultimate transfer of title to the buyer.
Typically, the brokerage fee is determined as a percentage of the selling price, with a range of 6% for more affordable homes and 3% for more costly ones. The seller’s brokerage fee pays for the following: marketing and viewings of the property, negotiations with prospective buyers, preparation of all transaction paperwork, supervision of the closure, and assessment and appraisal of the property in Russia.
Bank Fees
Most real estate deals in Russia are done in cash. When you buy something from someone, you put the money in a Russian bank’s safety deposit box, which serves as an escrow account to ensure the money is paid when the ownership transfer is finalized. When the buyer presents the whole set of registration paperwork in their name, the seller will get the full deposit.
Agreements about Deposits
The typical Russian real estate transaction takes anything from five weeks to several months and involves gathering paperwork from many government agencies, as well as the buyer having to come up with a down payment or the seller having to locate a new place to live. This is why before a final sale can occur, the buyer and seller will come to an agreement, known as a depository agreement, outlining the specifics of the transaction and what each side will need to do their part.
Buyers pay a deposit (Avans) or property deposit (Zadatok) when signing the preliminary agreement to remove the property in Russia from the market until the necessary paperwork is gathered and the deal is closed. Rather than being a fixed percentage, the deposit amount is typically a mutually agreed upon round number. To do due diligence on the property and prepare a depositary or preliminary agreement, you should always engage a competent and dependable agent or a Russian real estate lawyer.
Notarization
Although a notarization agreement is not required by law, it is highly recommended since it is a substitute for purchasing title insurance. Notary costs range from 0.7% for more costly properties to 1.5% for less expensive ones, with the exact amount dependent on the transaction price.
Real Estate Transactions in Russia
When all documentation and due diligence have been finalized, the next step is closing, during which the parties sign the sale-purchase agreement, and the money is placed into the bank. The next step is to have the sale agreement filed with the state.
The parties must sign an Acceptance Act at the bank, notary public, or real estate lawyer’s office on the day of the property transfer. This assures the buyer that the property is being sold in the condition as agreed upon.
The transfer of property rights is formalized when the sale-purchase agreement is registered with the Federal Registration Service for Moscow. The typical time to finish is 30 calendar days, but if you’re financing the home with a mortgage, it may be hastened.
Foreigners’ Right to Buy Property in Russia
Russia has no regulations that prevent foreign nationals from purchasing real estate, including homes and lots. Nevertheless, such transactions are not without their subtleties. Here is how the process begins:
- The passport must be translated into Russian and notarized.
- A spouse’s approval is required for all marital transactions.
Bringing a translator to the negotiation table is customary when a non-Russian-speaking buyer is purchasing real estate. Another option is to use a representative. PayMeHere will locate the perfect home for you, gather and prepare all the necessary paperwork, and be there for you every step while you make a purchase.
Considerations Before Buying Property in Russia
Make sure your presence in this country is lawful before anything else. The necessary documents are the visa, migration card, ETA, and residency permit. Acquiring real estate by a foreign national’s spouse requires government approval. The process also has other characteristics.
- A foreign national may enter into a contract directly or via an authorized agent. A notarized power of attorney must be signed to do this.
- Before purchasing a home and land parcel in the Russian real estate market, ensure that the land is free of any liens and may be registered by an individual outside the country.
- Passports and other papers requiring translation must be prepared by a trained professional and notarized before submission.
- Once the transaction is registered in Rosreestr, it is deemed finished. Next, the necessary paperwork, including the ownership certificate, is prepared and provided.
Property Taxes in Russia
A buyer or donee is liable to pay property taxes on an individual’s behalf when they take possession of residential property in Russia. Based on the information supplied by Rosreestr to the fiscal authorities, the individual is immediately registered as a taxpayer by the Federal Tax Service (FTS). A person’s personal property under the jurisdiction of a certain municipality may be subject to a tax known as the Individual’s Property Tax. The tax rate, tax deductions, and privileges are determined locally and vary from one location to another. However, the fundamental principles of the Russian Federation Tax Code (Chapter 32, “Individual’s Property Tax”) will serve as a basis for all of them.
A normal calendar year is the tax year defined under the Tax Code. Upon receipt of the FTS invoice, the tax must be paid yearly before December 1st after the tax period. The FTS should use the cadaster or inventory price of the residential property in Russia to calculate the tax. Most of the 85 regions (federal government members) continue to use inventory prices for tax purposes; however, 28 of those areas have switched to cadaster price (CP). Individual property tax rates cannot exceed 0.1% for residential properties in CP-using areas. From 2020, the federal government has all tax calculations done using the CP of the Russian real estate market.
The tax base is determined by multiplying the inventory price by a specific index issued by the Russian Ministry of Economic Development if the area still utilizes that method:
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