Residence permit in the Russian Federation for purchasing real estate property

Aug, 13 2020

Residence permit – is a document that grants foreign citizens the right to permanently live in Russia, do business, freely move from region to region as well as cross Russian borders. Residence permit grants a foreigner almost the same amount of rights as Russian citizens have and imposes very few restrictions. 

However, residence permit obtainment is a time-consuming and lengthy procedure. With rare exceptions it is necessary to obtain temporary residence permit first of all, to pass at least 8 months in the country and only then apply for residence permit. Meanwhile, the permit often has to be issued according to quota set by the government which is quite small and difficult to win. Thus, many foreigners are interested in obtaining residence permit in Russia through purchasing real estate property. 

The thing is that legislation of many countries simplifies the procedure of residence permit issuance as well as citizenship obtainment if the foreigner purchases real estate property. So, how is it regulated in Russia?

Obtaining citizenship through purchasing real estate property in Russia

Russian legislation provides benefits for certain categories of foreigners when applying for documents. For example, those who are officially recognized as native Russian language speakers. However, if you want to obtain residence permit in Russia, buying real estate will not help you. 

Nowadays acquisition of real estate property in Russia does not somehow affect citizenship or residence permit obtainment. At the same time, real estate’s cost does not matter. However, it is impossible to say that from migration standpoint purchasing real estate property is useless because a foreigner can register in it. 

Buying real estate property in Russia. Rights of foreigners  

Foreigners and stateless persons can purchase real estate in Russia. However, there are several exceptions to this rule. A foreign citizen cannot buy:

  • land of agricultural purpose;
  • land in the forest fund;
  • reserved territory;
  • land on the territory of defense facility;
  • real estate in the border regions of Russia;
  • property located in the closed administrative-territorial formations.

In all other cases, foreigners can buy apartments, houses, cottages, commercial premises as well as land plots and countryside houses. The area of land as well as the number of real estate property a foreigner may purchase is not limited by law.

What does acquisition of real estate property in Russia give to a foreigner?

Real estate acquisition does not provide any benefits while applying for residence permit in Russia as well as when dealing with other issues of migration law. However, it does not mean that acquisition of real estate property does not raise your status. After all, you can register in the purchased real estate, and this is a mandatory requirement for obtaining temporary residence permit.

Moreover, if you live in Russia more than 3 years and want residence permit, you should prove that you have a place where to live and can provide yourself financially. In this case, having your own real estate simplifies the procedure of obtaining residence permit in the Russian Federation. After all, if you have an apartment or a house, you will not be denied documents on the grounds that you have nowhere to live.

How transaction is processed

Making a transaction with a foreign citizen is exactly the same as in the case of dealing with Russian citizens. The procedure is standard: you need to sign a written agreement between authorized persons as well as pass the state registration of the transfer of rights to real estate in the Federal Service for State Registration.

If we are talking about the acquisition of rights to future real estate, the contract itself should be registered separately. This applies to entering into an equity construction transaction when you buy property before it is actually built.

However, like Russian citizens foreigners face all risks associated with buying real estate property. Thus, if you are buying an apartment or house on the secondary market, you must check the legal purity of the object. This is due to the fact that there is no guarantee that minors or other persons whose rights may conflict with your interests are not registered there.

You also need to make sure that the person selling property really has right to do so, that he is the owner or his authorized representative. Thus, foreigners as well as Russians, need help of a competent lawyer. 

Peculiarities of purchasing real estate property by foreign citizen 

In addition to general procedure, foreigner only needs to confirm the legality of his/her stay in the country as well as translate his/her identity card. Citizens of the CIS countries submit in addition to the main package of documents only a translation of passport or other identity card and notarize it. Citizens of other countries must also submit an apostille. However, these formalities can also be avoided by contacting an intermediary.

Property tax

Individuals who have real estate property or property equated to it should pay tax on property of physical persons. Garages, parking lots, kiosks, and similar architectural forms are considered to be equivalent to real estate.

This is a local tax, so it is set by municipal authorities separately, thus, you need to check the rate in local regulations. You need to know the cadastral value of your real estate to calculate the amount of tax. Owners often apply the procedure of challenging the cadastral value because its’ determining mechanism often fails. It greatly affects the final amount of tax.

Another tax is paid separately when selling property. The income of an individual when selling an apartment is subject to declaration if it has been owned by him for less than 5 years.

Notable that if a foreigner is not a resident, so lives in the country for less than 183 days during the year, he should pay tax at an increased 30-percent personal income tax rate.

However, it is also necessary to check existence of a double taxation avoidance agreement with the possibility of tax deduction for a citizen of a particular country.

The latest legislative amendments 

From July 2021, residence permit in the Russian Federation is planned to be issued for purchasing real estate property. These legislative changes have not entered into force yet, but the government is considering an initiative to grant a residence permit in the Russian Federation to foreign citizens who buy real estate here.

So far, this is only an initiative. Accordingly, it is impossible to say what will be the procedure for obtaining residence permit, whether it will be affected by the property value or whether deals procedure with foreigners will change. It is also unclear whether the legislative amendments will affect all foreign owners of real estate or only those who have purchased it in recent years. However, these innovations will not affect the procedure for obtaining citizenship in any way.

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