Rights and obligations of foreigners when buying real estate in Estonia

Rights and obligations of foreign citizens in Estonia: peculiarities of buying a home and legislation

Foreigners in Estonia have a wide range of opportunities to buy residential real estate. The laws of the country allow to buy apartments in different regions without hindrance. However, there are restrictions on the purchase of land plots, which may cause certain difficulties for non-residents, especially for those who are not citizens of the European Union.

Special conditions for citizens of Russia and CIS countries

Special conditions apply to citizens of Russia and CIS countries, for whom there are a number of restrictions on the acquisition of land plots. In particular, in border areas and on certain islands such as Saaremaa and Hiiumaa, as well as in areas around Lake Peipsi and Lake Pskov, there are certain rules that severely restrict the possibility of buying land and buildings on it.

Foreigners can bypass these restrictions by registering the property with a legal entity; however, it is important that EU citizens are on the board of the company. This also explains why countryside plots in Estonia attract less interest among Russians compared to similar properties in Finland.

Restrictions on agricultural land

Additionally, disparate rules apply to the acquisition of agricultural land and forest land by individuals. For example, if the size of the plot exceeds ten hectares, its purchase is available only to citizens of the European Union, which should be taken into account when planning real estate transactions.

Eligibility for a Schengen visa

When buying residential real estate in Estonia, foreigners can use the right to obtain a Schengen visa. The validity of this visa can be extended until the date of expiry of the passport. Howeverreal estate does not automatically entitle you to a residence permitFor this purpose, it is necessary to have certain ties to Estonia, e.g. through family, studies or work.

Tax liabilities of real estate owners

It should be remembered that property owners in Estonia also have tax obligations. Such taxes include:

• Land tax, which varies depending on the area and location of the property, averages about one hundred euros annually.
• Tax on income received from the sale of real estate, which is 20%. Foreigners, even if they are not Estonian residents, are obliged to pay this tax if they make a profit from the transaction.

To do so, you must complete and file an income tax return (Form V1), which is a mandatory requirement.

Conclusion

In conclusion, it is important to note that the process of buying real estate in Estonia for foreign citizens requires careful analysis of the legislation and knowledge of all aspects related to rights and obligations in order to avoid possible legal problems.For more in-depth information and professional support with the paperwork, it is recommended to contact a real estate professional.

We would like to thank our experts Andrei Prokofjev, Director of Andrei Prokofjev Kinnisvara, and Julia Ferman from Ober-Haus Real Estate Advisors Estonia for their help in preparing this material.

Peculiarities of buying real estate in Estonia for Russian citizens

Currently, the process of acquiring real estate in Estonia for Russian citizens is accompanied by a number of nuances, despite the existing taxation aspects. It is important to understand that taxes that may be assessed in Estonia will not be deductible in Russia, as there is no agreement between the countries to avoid double taxation.

As of early 2020, there are reports that work is underway to create such an agreement, but it has not yet been signed.

Tax obligations

Thus, Russians who own real estate in Estonia must follow local tax regulations. It should be noted that property owners who have owned real estate for more than five years receive an income tax exemption. This is particularly relevant as Estonia has tax exemptions for those properties that are used as a primary or permanent residence.

It is important to remember, however, that such benefits will not appear until two years after the last sale of the property.

Searching for real estate abroad

When it comes to buying real estate abroad, it is important for owners of foreign properties to consider their tax obligations in Russia. In Estonia, there are a variety of online platforms that make it convenient to search for real estate. Those wishing to purchase a home can easily study the available offers and organize viewings.

Popular resources for searching

Among the popular resources for finding real estate in Estonia are several iconic sites that offer a wide range of options for buyers:

• You can view various examples of available facilities at any time.

Interesting suggestions

For example, among the interesting proposals we can highlight a new four-room apartment in Tallinn with an area of 80 square meters, located in the most picturesque area of Pirita, just 3.5 kilometers from the beach. The residential complex is built using modern technologies, such as monolithic reinforced concrete with high sound insulation, and the windows are located on the sunny side. In addition, the building has a video surveillance system, which adds a level of security.

Other real estate options

Another great option is a studio apartment in the center of Tallinn, priced at 209,000 euros. This apartment has an area of 46 square meters, equipped with a sauna and a spacious balcony. This house has all the necessary conditions for comfortable living, including heating and a closed balcony.

Offerings in the Northeast

We should not forget about the options in the north-east of the country, where you can also find an interesting offer. For example, there is an opportunity to buy a one-bedroom apartment for only 6,000 euros in a small town, which is perfect for both permanent residence and temporary travel. It is ready to move in, sold together with furniture and appliances, as well as equipped with central heating and double-glazed windows.

Election and tax aspects

When comparing different offers on the real estate market, it is important to carefully approach the selection process and take into account all possible tax aspects. By exploring the Estonian real estate market, potential buyers can find many offers that meet their requirements and financial possibilities, which simplifies the search and purchase process.

Professional help

For convenience, you can also leave an application, and specialized real estate companies will help you choose the most suitable variations of objects. Thus, buying real estate in Estonia is becoming more accessible for Russians seeking to invest in foreign real estate.

Interesting suggestions from Andrei Prokofiev

There are some interesting real estate options in Estonia from Andrei Prokofiev that may attract the attention of buyers. One of the first lots is a two-bedroom apartment in the Püssi district, offered for a10,000 euros. This apartment on the third floor of a five-story block occupies an area of .58 square metersand is in a house with only120 apartments.

I stop briefly at the interior: the apartment has completed major renovation, radiators, plumbing and window units have been replaced. There is also new furniture, although some items are still being installed. The apartment has central heating and intercom system, which creates circumstances for comfortable living. In addition, the apartment is fully vacated and ready for immediate occupancy.

Apartment in Kohtla-Järve

The next object is an apartment in Kohtla-Järve, available for3,800 eurosShe has an area39 square metersand includestwo rooms. The apartment is located on the third floor of a four-story building with only a44 apartments. The environment is very green: the central avenue with fountains, stores and medical facilities are within walking distance.

The internal works in this apartment are not yet completed, but this accommodation has also been vacated and is waiting for new owners.

Apartment in the center of Tallinn

Among the most expensive offers is an apartment in the center of Tallinn, which is put up for a399,900 eurosand occupies130 square meters. This five bedroom apartment is located in a renowned and peaceful neighborhood, which is highly regarded by locals for its convenience and quietness. It is a great place to live, a strong plus point being the proximity to all the necessary services, while residents can enjoy the green garden, which is particularly pleasing during the summer months.

Three-room apartment in Kiviyla

In Kivily, there is an offer for a three-room apartment priced at3,500 eurosThe area of this property is56 square metersand is located on the fifth floor of the building with85 apartmentsInside, the apartment needs renovation, including the replacement of plumbing fixtures. It should also be noted that the gas supply in this apartment is turned off.

The city's infrastructure is well-developed: there is good transportation connecting it with neighboring towns and the capital; both buses and commuter trains are available. The bay is also nearby — just12 km...and to Tallinn, it's about along the highway.20 km.

Four-room apartment in Tallinn

Additionally, there is an offer for a four-room apartment on the Tallinn real estate market for295,000 eurosIt is located on the top floor of a five-story building and occupies an area of93.1 square metersThere is also a balcony. The apartment is fully prepared for living or use as an office. Air conditioners are installed here, which will be especially useful in hot weather.

One-bedroom apartment in Sillamäe

It wouldn't hurt to mention the one-bedroom apartment in Sillamäe, which is available for10,000 eurosThe area of this apartment is32 square metersIt is comfortably located on the first floor of a four-story brick building, with bright views to the southeast from the windows. It has a hallway, a combined bathroom, a kitchen, and a pantry, and the apartment itself is situated in a prestigious area near the Gulf of Finland.

One-bedroom apartment in Tallinn

The final lot is a one-bedroom apartment in Tallinn for92,000 euros, located on Pinna Street. The road to the sea takes onlyten minutesIf you are looking for affordable and convenient housing in Estonia, it's worth considering these presented options. All the apartments are ready to welcome new owners and will provide a comfortable living space with a cozy atmosphere.

Infrastructure and apartment offerings in Estonia

The sought-after infrastructure is represented by the company immops and the group avs, which offers an apartment for sale in Pärnu, Estonia. The total area of this residential property is 78 square meters, and its price is 13,000 euros. For more detailed information about this property, it is recommended to contact the representatives of the company Habita.

Plots in Kuulas

Habita International Estates Ltd presents a plot of land in Estonia for 175,000 euros. The area of the land is 10,582 square meters and is located in the highly valued Kuulas area. According to the urban planning regulations, it is possible to construct six buildings on this site, including:

• a two-story residential house;
• five non-residential properties.

A new construction area of 600 square meters has been allocated. This plot is located just half an hour's drive from Tallinn, only 600 meters from the coast.

Picturesque areas on the island of Saaremaa

In addition, the company offers plots of land with picturesque coastline on the island of Saaremaa for 80,000 euros. This region is perfect for nature lovers, and you can engage in activities such as:

• birdwatching;
• hunting;
• fishing;
• yachting;
• mushroom and berry picking.

The sold plots include agricultural land directly facing the sea, with a flat terrain suitable for construction.

Unique apartment in a historic tower

A unique apartment is also for sale in Tallinn, located in the medieval Hattorpe-Tagune tower. The area of this apartment is 55 square meters, and the price is 285,000 euros. This defensive tower was built in the 14th century and was connected to an elegant neo-Gothic building in 1879. The windows and balcony offer picturesque views of the ancient city and Tallinn port.

Fully renovated apartments

In addition, fully renovated apartments in Tallinn are for sale for 230,000 euros. This cozy studio has an area of 46 square meters and can be converted into a two-room apartment if desired. It is sold with furniture and all the necessary appliances shown in the photos, including:

• induction cooktop;
• oven
• refrigerator;
• a washing machine with a drying function.

Office spaces in Tallinn

Moreover, Habita offers office spaces in Tallinn. The area of the offices is 104 square meters. Interested parties can contact the company's representatives for more detailed information.

Houses for sale in Tallinn

In addition, a house in Tallinn with an area of 120 square meters is for sale at a price of 165,000 euros. For more detailed information about this property, you should also contact the company's representatives.

Unique house in the village of Loo

Another house worth mentioning is for sale for 380,000 euros. This residence has a total area of 128 square meters and is situated on a plot of 1,490 square meters in the village of Loo. The interior space includes:

• hallway;
• a spacious kitchen-dining room with access to the terrace;
• a cozy living room;
• bathroom;
• shower.

Beautiful house in Narva-Jõesuu

On the second floor, there is an amazing house for sale by a private owner for 390,000 euros. It is located in Narva-Jõesuu, Estonia, and covers an impressive 277 square meters. The property includes five separate rooms, among which are four bedrooms and two bathrooms.

This luxurious property is located just one hundred and eighty meters from the picturesque sandy beach of Narva-Jõesuu. The interior finishes are made using only high-quality and expensive materials, highlighting the prestigious status of this home.

Characteristics of the land plot

The land on which this house is built covers 1,228 square meters. The building itself was constructed in 2007, and its total usable area is 276.8 square meters. Detailed floor plans showing the dimensions of the rooms can be found among the property photos.

Two-bedroom apartments in Tallinn

In addition, Habita International Estates Ltd offers two-bedroom apartments in the capital of Estonia, Tallinn, for the price of 163,000 euros. These cozy apartments have an area of 40 square meters and are located just an eight-minute walk from the beach and the Stromi promenade.

Inside the apartment, there are two built-in wardrobes.

• one is in the hallway,
• another one — in the bedroom.

The kitchen is equipped with built-in appliances, which include:

• large refrigerator,
• the stove,
• oven
• dishwasher,
• extraction

The usable area of the apartment is 40.1 square meters, not including the balcony, and it also comes with:

• a balcony with an area of 4.4 square meters,
• heated storage room of 2.1 square meters
• parking space.

Legal aspects of the transaction

It should be noted thatThe participation of a notary is mandatory.During the transaction, the transfer of ownership rights will not be registered without him. You can find a suitable specialist either through recommendations or via the website of the Notary Chamber of Estonia.

It's interesting that all the documentation for the transaction is done in Estonian. Although many local notaries speak Russian, it is recommended to additionally consult a professional translator to clarify all legal aspects. They may also be needed for the official translation of the contract, especially if you plan to approach a Russian bank.

The role of a realtor in a transaction

The presence of a realtor is not mandatory; however, foreigners purchasing real estate in Estonia often turn to agencies or private specialists. In Estonia, the work of realtors is not licensed, and anyone interested can start this activity.

Nevertheless, there is a national chamber of brokers in the country.Estonian Real Estate Agents Association), which monitors compliance with work standards in this field. Since 2002, it has been conducting qualification exams for agents, and to be eligible for the exams, one must have at least a secondary education and two years of practical work experience in this area.

Tips for choosing an agent

When choosing an agency, it is advisable to refer to the broker registry and assess it independently:

• the professionalism of the specialist,
• the range and cost of the services provided,
• the region in which they operate.

On a specialized portal, you can find a list of Estonian companies engaged in real estate, among which there are many professionals ready to collaborate with Russian-speaking clients.

Final recommendations

Don't forget that it's very important to take into account before making a deal.features of Estonia's beachesThis can significantly impact your decision. Stay updated with the latest news and analytical data about the foreignreal estate market to better understand the buying process. For convenience in purchasing property, it is advisable to follow a step-by-step algorithm, starting from the first stage, which will help you approach this important matter correctly.

Reservation of real estate and advance payment

Reserving real estate and making a deposit are key steps that help the buyer protect their interests during the transaction process. The preliminary contract, which establishes the rules for reservation, includes the seller's obligations not to transfer the property to third parties within the specified timeframe.

The process of buying real estate in Estonia

During the process of acquiring real estate in Estonia, the parties have the opportunity to preliminarily determine the date of transfer of the property, which can be set for a period ranging from one week to a month. The actual transfer is carried out based on a deed drawn up in two copies, which is signed by both parties to the transaction.

Documents for a successful transaction

To successfully complete this operation, a specific set of documents needs to be prepared:

• Foreign passportor another document confirming the buyer's identity and legal status.
• Proof of legal residencein the territory of Estonia (visa or other relevant document).
• Marriage certificateif the buyer has a spouse.
• Prenuptial agreementthat may be required to carry out transactions without the involvement of a partner.
• Power of attorneytranslated into Estonian if the buyer represents the interests of a third party, such as a spouse.

Stages of making a payment

At the payment stage, it should be noted that Estonia is a highly developed country with advanced digital technologies, where cash is primarily used for small transactions, usually not exceeding 5,000 euros, and in some cases, 30,000 euros. Such financial operations can only be conducted in the presence of a notary, who will act as a guarantor for the transactions, although they will not physically count the money or confirm the transfer itself.

If the purchase amount is significant, it is better to use a bank transfer, which should preferably be directed to the notary's escrow account. This way, the notary protects the interests of both the buyer and the seller.

Transfer of funds

When depositing funds with a notary, the payer will need to fill out a special form explaining the source of the incoming funds. It is important to know that there are no established minimum amounts for the deposit (for example, it can be 500 euros). The notary will transfer the money to the seller's account only after the property transaction application is submitted to the property registry.

That is, he needs to ensure in advance that there are no obstacles to completing the transaction. Usually, the transfer of funds to the seller's account is made within three business days from the moment the sales contract is signed.

Opening a bank account for foreigners

Opening a bank account for foreign citizens in Estonia can be quite a challenging task, and the cost of this process ranges from approximately 200 to 250 euros. To successfully open an account, it is necessary to confirm a connection to Estonia, which can be done by purchasing real estate, starting a business, or having a job or studying in the country.

If there is no residence permit, an alternative would be to provide a work contract or a rental agreement, but even this does not guarantee a successful account opening. In Estonian government institutions, there is a belief that non-residents are essentially viewed as tourists, and tourists typically do not need a bank account.

In the absence of an account in Estonia, transfers can be made from your account in your home country. In this case, your bank may request additional documents to confirm the purpose of the transfer, such as a real estate purchase agreement. The stages of completing the transaction require careful attention to ensure that all aspects are considered and all necessary requirements are met.

The process of registering property rights

The registration of property rights in the case of a notarized sale transaction takes about one hour. Legislation establishes that the maximum period for entering information into the registry, also known as the land book, should not exceed one month. However, in practice, this period is often reduced to two weeks. The process of submitting the contract for registration is carried out by a notary specialist.

Notification and statements

Upon completion of the registration, all participants in the transaction receive notifications at their email addresses, as well as an extract from the property register, which confirms the transfer of rights to the property to the new owner. A notification is sent from the electronic registry, allowing access to a page with the necessary data, which can be saved in PDF format. This extract from the registry is the primary document certifying ownership rights. Meanwhile, the paper version of the sales contract, which the parties receive at the end of the transaction, does not have legal force as proof of ownership rights.

It should be noted that the statement has a temporary status, so for its use during the visa application process or similar procedures, the document needs to be updated periodically.The fee for obtaining this statement is about 2-3 euros.

Access to the electronic land registry

Permanent access to the electronic land register is intended only for citizens of Estonia. Foreign participants in the transaction are advised to keep a notarized paper version of the contract, which is provided immediately after the transaction is completed. If an electronic copy is needed in the future, it can be requested for a small fee.

Rights of the participants in the transaction

Andrey Prokofyev claims:“During a notarial transaction, the buyer acquires the right of ownership, the right of use begins at the moment the keys are handed over, while the right of disposal only arises after registration is completed. Thus, after registration, the owner will have all three rights, which together form their property rights.”

Remote transactions

Remote transactions can only be conducted with participants who possess an Estonian ID card. Foreigners with e-resident status can also participate in such operations. If this card is not available, executing a remote transaction becomes impossible. However, this situation can be circumvented by granting a notarized power of attorney to a realtor who will represent the buyer's interests. It is important to remember that the document must be translated, and the text requiring notarization is usually provided by a local notary.

The specifics of remote transactions

Yulia Ferman explains:“When conducting a transaction in a remote format, all participants must be in the system at the same time. It is not possible for the seller to be in one location with the agent and communicate with the buyer via video link. Each participant in the transaction is required to personally join the video conference.”

Conclusion

Thus, notarized transactions and the process of registering property rights have a clear structure that helps parties find solutions in various situations, including remote operations. This makes the process more accessible and adaptable for citizens and residents of different countries.

Introduction

In recent years, the residential real estate market in Tallinn has become increasingly interesting for potential buyers. Before making a purchasing decision, it is important to carefully examine all possible additional costs that may arise along the way. Let's take a closer look at the key points you may encounter.

Realtor services

As a rule, the services of an intermediary who will help you with the purchase of real estate are paid for by the seller of the property. At the stage of signing the contract with the owner, you should know that the purchase price already includes the commission fees of the real estate agency. Usually, this percentage varies from2%to5%from the price of the apartment or house. However, in special circumstances, the commission size may change, so we strongly recommend clarifying this issue with your realtor in advance.

Notary fees

As for the costs of notary services, they are usually split equally between the buyer and the seller. The standard rate is about3%from the transaction amount, to which value-added tax is subsequently added. Please pay special attention to the fact that when purchasing new buildings, all notary fees are fully covered by the buyer.

Land tax

In Estonia, there is no property purchase tax; however, residents of the country must consider the land tax, which can be up to100 eurosper year for an average apartment in Tallinn. In rural areas, this amount is often insignificant, not exceeding5 eurosForeign citizens who do not have resident status in Estonia are also exempt from paying land tax. Residents with permanent registration at the property are also not required to pay this tax.

State duty

The state duty related to the registration of property rights is calculated individually and amounts to0.25%from the cost of the property. For real estate in the mid-price category, this fee usually does not exceed200 euroswhich is a suitable option for most buyers.

Document translation

If you have decided to use the services of a professional translator, keep in mind that it is not mandatory when dealing with a real estateagency. In cases where you need to translate documents into Russian for better understanding of the terms, additional costs may vary from300 to 400 euros.

Building permit

If you are considering the possibility of buying a plot of land or a house, you will need to obtain permission from the local authorities, which will cost approximately150 euros.

Unique aspects of the real estate market

It is also necessary to consider the unique aspects of the Tallinn real estate market, especially regarding ownership structures. In old multi-story buildings, there may still be a form of "owners' community." This means that:

• When selling an apartment, neighbors have the first right to purchase it for three months after the contract is signed.
• During this period, to avoid any possible misunderstandings, it is better to refrain from making large investments in the renovation of newly acquired property.

Conclusion

In the Estonian real estate market, it is crucial to consider all possible expenses related to the purchase in order to avoid unexpected financial issues and to prepare properly for the transaction. This knowledge will allow you to approach the selection of housing in Tallinn with confidence and make the best decisions in this attractive city for living.

Introduction

Interference from neighbors in real estate acquisition matters can cause significant concern for new homeowners. Sometimes, neighbors express a desire to buy the property at the price set by the previous owner.

Preliminary negotiations

Before putting their apartment on the market, the owner usually conducts preliminary negotiations with other co-owners to find out if they are interested in purchasing the property. However, even if the neighbors officially decline, they still retain the right to buy the apartment within three months after the deal is completed.

Legalization of housing status

When it comes to legalizing the status of apartments in a residential building, this process is carried out through a notary. It is important for all residents to visit the notary's office to formalize their property rights in accordance with current legal requirements.

Purchase of a private house

We are purchasing a private house and need to pay attention to the availability of an occupancy permit. This document confirms that the building meets all necessary technical standards and is safe for living. If the permit is missing, it could become an obstacle to obtaining a mortgage loan from the bank.

Construction and permits

It is noteworthy that many houses built in the early 2000s may not have this permit. This is because earlier laws allowed construction without special conditions and did not emphasize permits if a building permit had been obtained.

Modern requirements

Recently, the situation has changed. It is now extremely important to obtain an operating permit, especially if the building was constructed after 1995 and no significant renovations were made during its construction. If a permit is missing for an already built house, it can still be obtained, but this process will take a considerable amount of time — from six to nine months.

• During this period, inspections will be conducted.
• A technical audit is being conducted.

Without this document, the property can be used, but there may be serious difficulties when selling, as Estonian banks generally refuse to finance such transactions.

Modern construction

These days, there is an active construction of new real estate projects that meet modern technical standards. All new buildings must have an energy efficiency class of at least "C," with "A" being the highest level.

• The most in-demand properties are of class "B".
• They are equipped with built-in ventilation and heating systems installed in the floor.

In addition, banks support the purchase of apartments in buildings with high energy efficiency ratings, which is reflected, in particular, in the reduction of the down payment on mortgage loans to10%.

Foreign citizens and mortgage loans

Speaking of foreign citizens, it should be noted that they can obtain a mortgage loan in Estonia only if they have a long-term visa, permanent employment, and a stable income. These requirements are aimed at reducing risks for banks when providing loans to citizens of other countries.

Therefore, potential borrowers should be prepared to provide all necessary documents that confirm their financial stability and legal status in the country.

Conclusion

In conclusion, I would like to summarize the main aspects of purchasing real estate in Estonia for foreign citizens. This process can be quite interesting and profitable, especially for those looking for investment opportunities or wanting to acquire a second property abroad. Despite some restrictions, such as the bans on purchasing land for citizens from non-EU countries, the process of buying apartments remains accessible and without serious obstacles.

Understanding tax obligations is an important part of the transaction. Foreign property owners should be aware of the land tax and the capital gains tax that may need to be paid upon sale. It is important to remember thatthe absence of a double taxation avoidance agreementThe situation between Estonia and Russia may complicate the tax situation, but this should not be a discouraging factor for making a purchase.

Additionally, I would like to highlight the growing interest in the Estonian real estate market due to its stability and attractiveness for investments. The variety of offerings, from luxury apartments in Tallinn to cozy flats in small towns, provides plenty of options to choose from. The ability to utilize modern online resources simplifies the process of searching for and purchasing real estate, allowing one to find suitable options right from home.

Key points:

• Restrictions on the purchase of land plots:apply to citizens of countries outside the EU.
• Tax Liabilities:There are land tax and profit tax when selling.
• Direct interest:The demand for the Estonian real estate market is growing due to its stability and attractiveness.
• Variety of offers:from luxury housing to apartments in small towns.

In closing this article, I would like to express my gratitude to the experts Andrey Prokofyev and Yulia Ferman, whose knowledge and experience helped me gain a deeper understanding of the nuances of the real estate market in Estonia. They have become a reliable source of information, which will undoubtedly be useful for both potential buyers and those who are just starting to explore opportunities in this field. I hope this article has been helpful and informative for everyone considering the possibility of purchasing real estate in Estonia.