Exemption from the 30% personal income tax collection at the sale of real estate for non-residents

Important notice: Law&Trust no longer work in Russia. Transfer of operational control over Law&Trust in Russia to local management and the formation of the LegalCraft brand was started in 2022 and came into effect in October 2024.

Since December 1, 2018 all tax non-residents of the Russian Federation are exempt from personal income tax (NDFL) in real estate transactions. It became possible due to Federal Law No. 424-FZ adopted on November 27. On the 30th of last month, the Law was published in the “Rossiyskaya Gazeta” official edition, which means it entered into force.

The innovation will concern the citizens of other countries residing in Russia who plan to sell real estate here. They are equalized with the citizens of the Russian Federation: the latter pay 13% personal income tax. The tax on real estate may not be charged at all if real estate was acquired more than 3-5 years ago.

If a non-resident ownership of real estate was not subject to changes for 3 or 5 years (depending on the year of purchase of real estate), he has the right to reduce the income from the transaction by the amount of expenses that he incurred during its acquisition. So you can additionally reduce the amount of tax. Now it is available to residents of foreign countries.

In practice, this means that residents and non-residents of the Russian Federation will be able to avoid the tax burden of 30%. It can be decreased to 13% and below, if the owner has owned the property for 3-5 years. In some circumstances,  personal income tax may not be levied.

According to real estate market experts and lawyers, this innovation is a timely and reasonable step in the context of deregulation. The Law is intended to stimulate the real estate market, but the number of non-residents who want to sell real estate in the Russian Federation is not so large to have a serious impact on the market.

This especially relates to the segment of new developments: they can not be owned for 3-5 years as they have recently been erected. From the standpoint of investors (including foreign ones), the primary housing market is the most attractive.

Experts also doubt that a lot of foreigners, who are today ready to buy property in Russia for the purpose of resale in 3-5 years, will appear in the conditions of an unstable economic situation. Most investors so far are not ready to build plans for the medium and long term.

It should be noted that a tax resident in Russia is an individual who resides in the country for at least 183 days within one year.

Law&Trust International provides a full range of services in the field of real estate purchase. We will not only select the necessary property for you, but also solve all legal issue during formalization of ownership.