Government Affairs

Russia Rules Sale of Immovable Property by Non-resident is Taxable

A recent guidance letter from the Russian Ministry of Finance holds that a sale of immovable property located in Russia (for example, a home) is taxable in Russia if the seller ceases to be a resident of Russia at the end of the tax period during which the sale takes place. See Guidance Letter 03-04-05/86453 (December 25, 2017).

Under Russian tax law, a sale of such property by a resident is not taxable.  However, according to the Guidance Letter, if a resident of Russia leaves the country and, at the end of the year, no longer satisfies the test for determining residency, then gain from the sale is taxable.  

How this will impact mobility: If a U.S. expat purchases a home in Russia but ceases to be a Russian resident at the end of the year during which that property is sold, then the sale will be taxable in Russia.

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