How a Russian Can Sell or Buy Real Estate: A House or Apartment in Germany While Being in Russia and Unable to Travel to Germany?
The easiest way is to conduct the transaction through a power of attorney, allowing the transfer of money to the seller's or a trusted person's account in Europe or Asia.
But what about Russians who do not have an account in a European bank? Or, for example, if your account in Germany has been closed or frozen? There are several legal ways, one of which we will elaborate on in this article.
For instance, if both the seller and the buyer of the property in Germany are Russians, the payment for the apartment can be made in Russia. Since 2022, the number of people leaving Russia and wishing to purchase an apartment or house in Germany has increased at least twice. Many clients continue to buy real estate in Germany as an investment while in Russia, and many are willing to make the payment for the property in Russia.
You can learn how a remote real estate transaction in Germany is conducted by power of attorney by following the link.
How to Sell an Apartment or House in Germany to a Russian So That the Payment is Made in Russia?
Let’s go through the sales process step by step, considering the currency and legal aspects.
Step 1: Granting Powers of Attorney Since both the seller and the buyer are in Russia, they can conduct the transaction through a representative in Germany. For this, it is required:
- The seller and the buyer must execute notarized powers of attorney for their representatives in Germany. These powers of attorney must be legalized and translated into German.
- The representatives in Germany will act on their behalf when concluding the sales contract.
Alternatively, it’s possible to sign the contract in Russia followed by an apostille!
Step 2: Appointing a Notary in Germany The notary in Germany plays a key role in the process of buying and selling real estate:
- The seller and buyer (or their representatives) approach the notary who will be responsible for preparing the sales contract.
- The notary checks the legal status of the property, existing encumbrances (e.g., mortgages), and the accuracy of the documents.
Step 3: Concluding a Preliminary Sales Agreement Preparing a preliminary sales agreement is an important step. This document records all the essential conditions of the transaction, including the price of the property and payment deadlines.
The preliminary agreement will also specify that payment will be made in rubles within certain deadlines to the seller's account in Russia (at the established exchange rate on the day of signing the agreement). Once the funds are transferred to an escrow account or directly to the seller, and both parties document the transaction, the notary will submit the documents for registration of ownership to the buyer.
Step 4: Registering the Transaction and Transferring Ownership The notary sends the documents to the land registry for the registration of the new owner of the property. Once the registration is completed, the ownership right is officially transferred to the buyer.
Step 5: Reporting to Tax Authorities After the transaction is completed, both the seller and the buyer must report to the tax authorities in Russia and Germany:
- The seller in Germany pays capital gains tax (if the property is sold less than 10 years after purchase).
- The buyer must report to the Russian currency control authorities since the transaction involves foreign currency operations.
Conclusion To conduct a real estate transaction between Russians located in Russia, the main steps include granting powers of attorney, using notarial services in Germany, and properly organizing currency transfers while complying with tax and legal regulations. Utilizing an escrow account is an important tool that ensures the successful completion of the transaction.
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