In recent years, the popularity of apartments without a residential destination in Russia has been growing. These apartments are called апартаменты in Russian. Apartments with a residential destination are called квартиры in Russian. In this blog post I will refer to apartments without a residential destination on his Russian as apartamenty and to apartments with a residential destination as a kvartira.
On this page
- The legal status of kvartiry and apartamenty
- Further definition of a Kvartira
- But what are apartamenty then?
- No permanent registration possible in apartamenty
- Higher tax rate for apartmenty
- How can you check whether apartmenty belong to one or the other category?
- No co-ownership of the entire building
- No democratic choice of the managing company
- The difference in enforcement of a judgment
- No tax refund upon purchase
- Why are apartamenty cheaper than kvartiry?
The legal status of apartamenty and kvartiry, what is the difference?
Apartamenty do not have a residential destination, but in order to understand what this means, you need to know what is formally required in Russia for an apartment to have residential destination. For this purpose, the following requirements must be met in Russia (Section 15(2) of the Russian Housing Act):
- It must be secluded areas
- Which must be suitable for permanent living (they meet certain technical and sanitary standards).
- It must be real estate
These properties can have a residential destination in Russia (Section 16(1) of the Russian Housing Act):
- A house
- A kvartira, part of a kvartira
- One room
Further definition of a Kvartira
A kvartira (i.e. an apartment with a residential destination) is further defined in art. 16 section 3 of the same law as:
- An isolated unit in a building with several kvartiras (многоквартирный дом)
- Which has direct access to the common areas of the building.
- Consisting of one or more rooms
- And of supporting room’ (помещение вспомогательного использования) for the needs of the citizen. These are in practice: the bathroom, the toilet and the storage room.
But what are apartamenty then?
The concept of kvartira is therefore clearly defined in Russian legislation. Unfortunately, this is not the case with apartamenty. There is no definition of apartamenty in Russian legislation. Unlike kvartiry, apartamenty can be located in a building that also houses offices and shops.
In which legislative instrument do you come across the term apartamenty?
As mentioned before, the Russian Housing Act does not contain the term apartamenty. However, we do find this term in the Russian regulations on hotels. For example in Постановление Правительства РФ от 16.02.2019 N 158 “Об утверждении Положения о классификации гостиниц”,
In this document we come across the following terms:
- Aparthotel (апарт отель) – a hotel that only has studios and apartamenty.
- A complex of apartamenty (комплекс апартаментов): a hotel that has apartamenty of different categories, where each unit has its own kitchen and its own toilet.
In the same document, the term apartamenty is defined as follows:
A separate unit within a hotel of at least 40 square metres consisting of at least 2 rooms (living/dining room and bedroom(s)) with a double bed of 2 x 2 metres and a small kitchenette, an electric stove, a microwave, a dishwasher, an oven, a kettle, an extractor fan, crockery, a fridge and a small freezer.
It’s important to keep in mind that this definition is contained in a document that is meant to set a standard that allows a hotel to be classified in one or the other category.
The definition of apartamenty in this document is therefore not a binding general definition. It is not the case that apartments with an area of less than 40 square metres are not apartamenty.
No permanent registration possible in apartamenty
Despite the lack of a clear definition of the concept of apartamenty, it is safe to say that they are officially intended for temporary residence, not for permanent residence.
Because they are not officially intended for permanent residence, it is not possible to make a permanent registration at the address of apartamenty. However, this is especially important for Russians. Russians want to make a permanent registration at the address of their home and that is not possible in apartamenty.
Only temporary registration (временное пребывание) is possible in apartamenty). The maximum term of a temporary registration is 5 years, so that is not that temporary. Still, many Russians find this limited registration period scary. Even though a temporary registration practically offers a Russian the same rights as a permanent registration, namely:
- Free medical care in government hospitals
- Right to placement of children in nursery and primary schools
- Right to obtain a Tax Identification Number (INN)
- Right to receive pension
The only real disadvantage of a temporary registration is that it has to be renewed every 5 years.However, a foreigner residing in Russia without a temporary or permanent residence permit cannot get a permanent registration in Russia anyway, so this is not of direct interest to him/her. It is still a point to pay attention to, however, because the fact that this is an important consideration for Russians, rightly or wrongly, makes apartamenty less liquid.
Property tax for apartamenty and kvartiry in Russia
Owners of a kvartiry pay a lower rate of wealth tax than owners of apartmenty. In addition, the rates vary by region. Below are the rates applicable in Moscow and in St. Petersburg for the 2018 wealth tax, which must be paid before December 1, 2019. Source.
Besides these rates you should also take into account that 20 square meters is exempt from property tax for kvartiry. For apartamenty there is no such exemption.
Real estate tax rates in Moscow
|Кvartiry with cadastral value below RUB 10 million ( $153,967 USD)||Kvartiry with cadastral value between 10 and 20 million rubles ($153,967 and $307,919 USD)||Kvartiry with cadastral value between 20 and 50 million rubles ( $307,919 and $769,861 USD)||Kvartiry with cadastral value between 50 million rubles and 300 million rubles ($769,861 and $4,616,433 USD)||Apartamenty with a cadastral value of less than 300 million rubles ($4.61 million USD) or which are located in a building with more than 20% office space, retail space, restaurants, etc.||Apartamenty and kvartiry with a cadastral value of more than 300 million rubles ($4.61 million USD). And apartamenty that are located in a building with more than 20% office space, retail space, eateries, etc.|
|Tax Rate in Moscow||0.1% of the cadastral value||0.15% of the cadastral value||0,2% van de kadastrale waarde||0.3% of the cadastral value||0,5% of the cadastral value||2% of the cadastral value|
Real estate tax rates in St. Petersburg
|Kvartiry with a cadastral value of less than 7 million rubles ($107,714 USD)||Apartamenty, which are not located in an office building and cadastral value less than 300 million rubles ($4.61 million USD)||Kvartiry with a cadastral value between 7 and 20 million rubles ( $107,714 USD and $307,670 USD)||Kvartiry with a cadastral value between 20 million and 300 million rubles ($307,670 USD and $4.61 million USD)||Kvartiry and apartamenty with a cadastral value of more than 300 million rubles|
($4.61 million USD)
|Tax Rate in Saint Petersburg||0,1%||0,1%||0,15%||0,2%||2%|
How can you check whether apartmenty belong to one or the other category?
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When buying apartmenty when they are still under construction u you cannot be sure how your apartamenty will be qualified by the Russian Tax Authorities. Having your apartamenty categorized unfavorably is thefore something that can keep buyers of under-construction apartamenty awake.
In Moscow, the municipality keeps a register with which the highest rate is charged. This can be viewed here, on the site of the municipality of Moscow. In addition, the city council of Moscow has adopted a document in which it has been decided to tax eight properties that according to the above mentioned list should be taxed according to the 2% rate with the 0.5% rate. It is striking that all 8 properties that have been given ‘amnesty’ belong to the top segment of the market.
I am not familiar with a similar register in St. Petersburg.
No co-ownership of the entire building
An owner of a kvartira is, according to article 36 of the Russian Housing Act, co-owner of the entire apartment complex, in which the kvartira is located. This kind of property is called in Russian общая долевая собственность.
As said, the standards of the Housing Act do not apply to apartamenty. Owners of apartamenty are not co-owners of the entire building in which they are located.
No democratic choice of the managing company
Owners of kvartiry have the right to jointly appoint a managing company of the apartment complex.
A managing company of an apartment complex has the following responsibilities:
- Maintenance of joint ownership in and around the building
- Establishment of rules governing the use of this common property
- Providing so called utility services (коммунальные услуги), these are:
- Supply of cold & hot water
- Supply of electricity
- Providing drainage
- Gas and heating supply
As a rule, a managing company in a building with apartamenty is not appointed by the owners of the apartamenty, but by the developer.
Also, the rate that owners of apartamenty pay for utility services is considerably higher than what is paid for kvartiry (around 20% higher usually).
The difference in enforcement of a judgment
In Russia, one cannot be deprived of one’s kvartira when enforcing a sentence if it is the person’s only suitable place to live. The exception to this rule is the case where the property is mortgaged. Because apartamenty are not residential properties, they are not subject to this restriction.
No tax refund upon purchase of apartamenty
A tax resident of Russia can, under certain circumstances, receive a tax refund on the purchase of a kvartira. I have previously explained here in my blog post on tax rules for the sale of Russian property who is a tax resident of Russia. The maximum tax refund you can get upon purchasing an apartment in Russia is 13% of 2 million rubles, so 260 000 rubles (about $3,997 at the current rate).
For buyers of apartamenty a similar tax refund upon purchase is not available.
Why are apartamenty cheaper than kvartiry?
It may seem strange that apartamenty are a lot cheaper than kvartiry in the same location. How can this be explained if the land on which they are built has the same price?
Are apartamenty built with less quality material than kvartiry? This can’t be the reason. Apartmenty come in all shapes and sizes and price ranges. Some are definitely of higher quality than many kvartiry.
It is also common for the same apartment complex in Moscow or St. Petersburg to contain both apartments and kvartiry built to exactly the same standards and with the same materials.
How can we then explain the difference in price? Although some developers deny this, it seems that the main reason for the difference in price has to do with the fact that building residential housing involves all kinds of side obligations: opening schools and kindergartens and similar facilities. There are no such obligations for the developer when building apartamenty.
Writing this blog post left me with a slightly unsatisfied feeling. Instead of indicating what apartamenty are, I have only been able to indicate what they are not: namely living space. This unsatisfied feeling, however, is more due to the Russian legislator than to my poor research. The Russian legislator has failed to include a clear definition of apartamenty in the legislation.
It is important to remember that there are no clear rules on what constitutes apartamenty. It is not one clear category; it is a residual category to which different rules may apply. This may mean that they may be subject to an unfavourable rate of property tax.
Because it is not a residential property, the owner of apartamenty has slightly less rights and will most likely pay more for utilities. On the other hand, he pays 15-20% less for the same square meter.
In the Russian regions, apartamenty are not a common phenomenon yet.
Ivo van Rhijn is a trained lawyer and a slavist, but if you haven’t hired him, he is not yet your lawyer. Van Rhijn & Partners LLC tries to keep the information on this blog up date, but cannot be held liable for any inaccuracies or out of date information. If you are considering the purchase of Russian real estate we strongly recommend you hire us to check whether the information which is relevant to you is not out of date.
Please leave a comment below or contact us in case you have further questions.