In today's rapidly changing market conditions, professional advice and good marketing strategy are the key to fast sale. Evans will be delighted to assist and guide you through all the nuances, as well as legal and tax implications, of selling real estate in Moscow.
Below you can find some answers to the most frequently asked questions of our clients. Unfortunately, this page cannot address all the nuances and peculiarities of a real estate transaction, which are many. We will be happy to consult you on your particular situation, answer any questions about buying or selling a property in Moscow, and offer professional guidance through the entire process. Please feel free to contact Anya Levitov with any questions about selling or buying real estate in Moscow. You are also welcome to call us at +7 (495) 232-6703 if you are in Russia, or +1 (800) 840-6604 and +44 (20) 8002-9605 if you are in the US or UK, and our property consultants will be happy to assist you.
How do I prepare my property for sale? Read
I renovated my apartment many years ago and never obtained any permissions. Do I need them? Read
Are there taxes on sale proceeds? Read
I have owned a property for 10 years, and I am not a tax resident in Russia. Am I exempt from taxes? Read
I am planning to sell my property, do I need a broker? Read
Who pays a brokerage fee in Moscow? Read
As a seller, will I benefit from using multiple real estate brokers? Read
I already have a buyer for my property. Can I use Evans to help me close the deal? Read
What will be my expenses when selling a property? Read
Do I need to use a notary? Read
What are notary fees? Read
How are property rights registered? Read
How will a payment be made? Read
I live abroad and need to transfer the sale proceeds to my country of residence. How do I do this? Read
What are the main steps of a sale-purchase transaction in Moscow? Read
What is a depositary (preliminary) agreement? Read
What is a usual deposit amount in Moscow? Read
What is the procedure of the closure? Read
Is there any additional paperwork after the property is registered in the buyer's name? Read
How do I prepare my property for sale?
Unlike many other markets, few buyers in Moscow include a property's physical condition in the selection criteria, as many buyers prefer to do their own renovations and labor costs are relatively low. Other conditions of sale, however, are more important, such as legal condition of the property and the accuracy and completeness of the seller’s paperwork. These may affect a sale price.
Several examples: If you have Russian family members permanently registered in your apartment, we recommend registering them at an alternative address and putting the property on the market legally free of third party rights. If you inherit the property, you have to register your title before entering into the transaction. The inheritance procedure may take from several months to a year, so check your ownership documents to make sure that it has been done. If you need assistance, feel free to contact us and we will do it for you.
Apartments that have no registered persons, are free from seller’s belongings, and have no residents are considered to be a safer buy. They are in higher demand and as a result can command a higher price.
Back to the top
I renovated my apartment many years ago and never obtained any permissions. Do I need them?
No, in today’s sellers market, you do not really need to obtain any permissions to sell your property. However, from the moment of purchase the buyer assumes responsibility for the performed changes. Some buyers will be reluctant to do so and might ask for a discount. Therefore, it might be worthwhile to invest some time and money in bringing your paperwork into accordance with the existing floor-plan. Evans will gladly assist you in bringing your BTI plan up to date. As the registration of changes to the floor-plan becomes more and more difficult every year, the earlier you do your paperwork the better. Some changes, that were possible to get permission for in 1995 are no longer legal, for instance. Please contact us with any questions about your particular situation.
Back to the top
Are there taxes on sale proceeds?
The tax rate and the calculation of the taxable income from the sale depend on the tax residency of the seller. Generally, persons who spend more than 183 days per year in Russian Federationare considered tax residents and have a tax rate of 13%. Such sellers pay the tax on capital gains, i.e. on the difference between the purchase and the sale price.
For tax residents generous tax exemptions are also available. If a seller owns a property for more than three years, the seller is exempt from all taxes. If a seller owns a property for less than three years, the seller gets an exemption of 1,000,000 rubles (approximately $35,000 US dollars).
Unfortunately, there are no tax exemptions available to non-residents. Such sellers pay 30% on the entire sale proceeds, irrespective of the amount spent on the acquisition of the property.
To avoid dual taxation in the country of residence, the seller can use dual taxation agreements, which Russia has with a number of countries. However, it might be worth it inquiring in your country of residence about different fiscal nuances.
Back to the top
I have owned a property for 10 years, and I am not a tax resident in Russia. Am I exempt from taxes?
Unfortunately, no tax exemptions are applicable to tax non-residents. Your tax rate is 30% on the entire sale proceeds regardless of how long have you owned the property.
Back to the top
I am planning to sell my property, do I need a broker?
Selling a property can be divided into two separate tasks. First, marketing your property and finding a buyer. Second, structuring a transaction and ensuring a safe and prompt receipt of the payment.
If you speak Russian or can rely on someone’s help, you can place ads marketing your apartment or a house in newspapers and magazines with your telephone number. Newspaper ads are relatively inexpensive. However, to ensure success and safety, be prepared to screen all calls and show your property at the convenience of potential buyers. Real estate professionals, however, have access to more advertising venues, such as glossy real estate magazines, websites, co-broker and inter-company listings and their own pool of actively looking buyer-clients.
Moreover, a good broker will not only find you a number of “willing and able” buyers, but also structure the deal and protect your interests through the entire sale up until the final receipt of the payment where you need it. A professional real estate company like Evans has a lawyer on staff, providing significant savings on legal fees.
Alternatively, you may choose to hire a real estate lawyer to structure and oversee the transaction. In general, unless you are an experienced seller in the Russian market, we recommend having someone on your side when you sell a property in Moscow. Russian Marital, Residential, Civil and Tax Codes may have major implications on even the simplest real estate deal - that is why using professional help is beneficial.
Back to the top
Who pays a brokerage fee in Moscow?
The brokerage fee is paid by the party for whom the service is provided whether it is a buyer or a seller. In both cases, the brokerage fee is usually calculated as a percentage of a sale price ranging from 6% for cheaper properties and going down to 3% for the ones that cost around 2,000,000 USD.
The buyer's brokerage fee is inclusive of the property search, ownership documents and the rights of use check, arranging for the closure of the deal, and supervision of the final property transfer to the new buyer.
The seller's brokerage fee covers evaluating the property, marketing the property using multiple advertising venues to reach maximum potential buyers, arranging the viewings, negotiating with potential clients, preparing the complete set of necessary documents for the transaction, arranging for the closure of the deal and supervision of the final property transfer.
Most importantly, an Evans agent will act as your representative, protecting your interests during negotiation of the conditions of the sale-purchase deal. We will prepare the necessary paperwork, arrange the structure and procedure of the closure to guarantee that everything goes smoothly, eliminate your financial risks, and ensure that you receive your payment on time and don’t overpay in fees.
Back to the top
As a seller, will I benefit from using multiple real estate brokers?
Many sellers think that listing a property for sale with several real estate companies will help them reach a wider audience and find a buyer faster at better price. Although this approach might indeed give you immediate access to buyer pools of several companies, there are also negative consequences that you might need to be aware of. First, a non exclusive broker has fewer incentives to spend extensively on advertising.
Second, and most importantly, non-exclusive brokers offering the same apartment on the market are likely to compete for the same buyers on price. Offering a lower price is the easiest way to differentiate yourself from other brokers in order to close the deal. Inter-company databases used by most brokers allows for easy tracking of properties marketed by more than one agent. A potential buyer or a buyer’s agent will answer an ad with a lowest price and/or view a property with the one who offers it cheaper.
On the other hand, a diligent exclusive broker will thoroughly market the property to reach all the potential buyers and will bring you all the offers to choose from.
Back to the top
I already have a buyer for my property. Can I use Evans to help me close the deal?
Evans offers legal assistance protecting seller’s interests during the sale as a separate service. The fee is usually half of our regular brokerage fee but not less than $2500 dollars.
Back to the top
What will be my expenses when selling a property?
Common market practice is such that all the costs associated with a sale-purchase transaction are covered by the buyer. There are no additional sale taxes or fees on the sale proceeds, except for the income tax. Your only other expense will be a brokerage fee or legal fee if you choose to hire professional help.
Back to the top
Do I need to use a notary?
The law does not require notarization of the sale-purchase agreement. Since notarization is costly, and it is customarily a buyer's expense, it is usually a buyer's choice.
Back to the top
What are the notary fees?
Notary charges vary depending on the sale price of the apartment and range from 0.7% for more expensive properties to 1.5% for smaller ones. These fees, however, are usually covered by the buyer.
Back to the top
How are property rights registered?
Registration of the sale-purchase agreement with the Main Department of the Federal Service of State registration, Cadastre and Cartography for Moscow makes the transfer of the property rights. It is done in a number of its offices around Moscow. The registration can be arranged by the notary or by the realtor. The regular term of registration is 30 days. The state fee, usually covered by a buyer, is approximately 500 rubles. In addition, there is a 7000 rubles fee if you choose to hire someone to take your paperwork to these offices on your behalf.
Back to the top
How will the payment be made for my property?
Although, the overwhelming majority of real estate transactions are made in cash, the sale-purchase transactions always take place in a bank. Here, the bank safe depository boxes replace an escrow account to guarantee buyers and sellers that the payment is made upon the final ownership transfer. In this case, the full cash amount is deposited in a bank deposit box with a condition to the bank to release the money to the seller upon presentation of the complete package of registered documents under the buyer’s name.
Such bank service costs may range from $30 to $80 dollars per safe deposit box. It is a common practice in Moscow that a buyer covers most of these expenses.
More expensive apartments may sometime employ the payment by wire transfer. However, there is no well established institution of an escrow account, and therefore, ironically, such transactions are riskier than cash. Usually, the payment is made after the notarization and before submitting for the state registration. Since such transfers are made unconditionally, the state registration may be enforced or blocked irrespective of whether the payment was or was not made.
As an alternative to wire transfer and costly foreign escrow account arrangements, Evans recommends using a well established local procedure of a "Letter of Credit". The cost of its arrangement depends on the bank and varies from $500 USD to 2% of the transaction amount. Not all banks are able to arrange a Letter of Credit though.
Back to the top
I live abroad and need to transfer the sale proceeds to my county of residence. How do I do this?
As a non resident of Russia, you can open a special type of non-resident bank account in any Russian bank. This must be done in person while in Russia. Such an account allows you to import and export any amount of cash across the border. Bank fees and bank requirements vary greatly from $20 to 1.5% of the amount. Evans will recommend you the best bank for your particular needs.
Back to the top
What are the main steps of a sale-purchase transaction in Moscow?
The process of buying an apartment can be divided into the following stages: finding a potential client for your property, negotiations and signing of the preliminary agreement, preparing the closure, closure, payment and registration of the deal, and, finally, a property transfer.
Back to the top
What is a depositary (preliminary) agreement?
Most real estate deals in Moscow extend in time for a period ranging from two weeks to several months. The reasons for this are many. First, any real estate transaction in Moscow requires obtaining of current documents from various states institutions. Second, the buyer may need to secure financing or the seller may need to secure alternative residence. As a result, there is a need for a preliminary agreement between the buyer and the seller. Preliminary or depositary agreements describe all of the conditions of the future deal as well as outline the list of the necessary documents to be provided by the sellers.
Back to the top
What is a usual deposit amount in Moscow?
Upon the signing of a preliminary (depositary) agreement, a buyer pays to a seller a deposit, usually in cash, to take the property off the market for the period before all the required documents are assembled and the closure is prepared. The amount of the deposit is usually not representing a certain percentage of the property price, but is a round number, which both parties find acceptable.
According to the Civil Code of the Russian Federation there are two types of deposits: advance payment (Avans) and proper deposit (Zadatok). Depending on your circumstances, Evans professionals will help you determine which type of deposit is best to use in your real estate transaction.
Back to the top
What is the procedure of the closure?
If the payment for the apartment is made in cash, the full amount is deposited in a safe deposit box. Depositing the funds often involves checking the bills for authenticity by bank officials. Unlike other transaction costs, this cost is usually covered by a seller. After this procedure is completed, the parties proceed to sign the sale-purchase agreement. The signing usually takes place at the bank, in an office of a realtor or notary , in cases whereyou choose to use a notary. The signed agreement is submitted for state registration, upon which the actual transfer of the ownership right takes place.
If you choose to make the payment by a wire transfer, the procedure may vary. Evans professionals will help you develop a transaction procedure to protect your interests.
Back to the top
Is there any additional paperwork after the property is registered in the buyer's name?
On the date of transfer of the property, the parties need to sign an Acceptance Act, which certifies that the apartment is transferred to the buyer in the acceptable condition. This Act, even though it does not need notarization, is an integral part of the paperwork for the apartment and should be kept by both parties.
Browse current offers on the market
Read a New York Times article about the Moscow real estate market (February 14, 2007)
Back to the top
