MY PRACTICES
This guide details the essential legal, tax, and compliance framework for U.S. residents selling real estate in Russia, emphasizing the need to navigate international sanctions, currency controls, and complex cross-border tax reporting. It provides a comprehensive roadmap covering preliminary risk assessments, secure settlement mechanics, and specialized U.S. and Russian tax planning to ensure the transaction and proceeds reach the U.S. successfully.
SELLING RUSSIAN PROPERTY FROM THE UNITED STATES
Selling Russian real estate from the United States
Most owners are told it cannot be done. Often that is wrong — but the reason it is wrong is specific to your situation, and so is the reason it sometimes isn't. Legal assistance with remote sales of Russian apartments, houses, land and inherited property: from assessing whether the transaction can proceed, through preparing the documents and structuring payment, to the United States tax and reporting obligations that follow.
Whom I assist
Owners living in the United States who hold property in Russia and want to sell it. Heirs who have inherited and do not yet know what they have. Co-owners of a fractional interest. Former Russian citizens who have renounced. Dual nationals. Estates with United States-connected beneficiaries. And owners already partway through a sale who have run into something.
The scope of my involvement
I personally undertake the legal analysis, the drafting and the transaction planning, and I coordinate the Russian professionals, representatives and financial institutions whose participation the transaction requires. You do not have to hand the whole matter over. Most people who reach this page already have someone — a relative in Moscow, an agent, a Russian lawyer, an accountant who has been doing the returns. I take defined assignments alongside them as readily as I take a matter from the beginning. What that looks like is set out in Section 5.
What is done by others, and is not represented as being done here. Russian notarial acts, submissions to the registration authority and Russian litigation are performed by appropriately authorised professionals engaged for the matter — yours, or ones I identify and coordinate. My New York credentials are not presented as Russian admission or notarial authority.
Can this sale happen?
Every engagement begins with the same determination, in writing, before any document is drafted. Go. Your seller profile is identified. The property is classified and no ownership prohibition is engaged. You are either outside the Russian permission regime or the position is papered. Every party and institution in the sanctions perimeter has screened clean, with re-screening diarised. A named Russian bank, a named destination account and an approached United States receiving institution exist.
Conditional go. Something is unresolved but resolvable on a known timeline. What matters is not the label but four recorded facts: what is unresolved, who is resolving it, by when, and — the one always omitted — what must not be started until it is. The most expensive error in this practice is beginning work on title and authority under a conditional go that nobody defined.
No go. A prohibition applies and no severance route exists; a blocked person sits inside the perimeter with no licensing route; no settlement institution can be identified; or the necessary facts cannot be established.
A "no go" is rarely the end of the matter. Where land ownership is prohibited it becomes a compulsory-disposal engagement with its own statutory clock. Where sanctions are the obstacle it may become a licensing question. And where the better course is not to sell now, there are five alternatives — retain and let, gift to a relative, sale to a relative, a personal fund, or wait — each with a different tax profile in both countries.
Why four separate answers have to be obtained at once
The transaction sits at the intersection of four bodies of law that do not refer to one another, administered by people with no visibility into the others.
Russian civil and registration law determines whether title can validly pass. Russian counter-sanctions and currency control determine whether the transaction needs a permission and whether the proceeds may leave. United States sanctions law determines whether a U.S. person may take part at all, and through which institutions. The tax systems of both countries determine what it costs and what has to be disclosed.
A transaction can be flawless in three of these and fatal in the fourth.
The Russian notary certifying your contract has no interest in your Form 3520 position and no means of discovering it. Your New York accountant will not know that the apartment cannot be registered because an entry on the register requires your personal attendance. Neither will tell the other.
The four have to be tested in parallel at the outset, not sequentially as the deal develops — because the cost of discovering a problem in the second layer after the first layer's power of attorney has been obtained is the whole of the work already done.
Time. Owners underestimate the critical path, consistently, because the slow steps are invisible to them. Where a permission from the Government Commission is required, plan in months rather than weeks. Where a power of attorney must be executed at a Russian consulate, the binding constraint is not drafting — it is the availability of an appointment. That gets diarised at intake and is never tied to a negotiated closing date.
Irreversibility. Owners assume nothing is final until the contract is signed. In fact the transaction becomes hard to unwind earlier: at the power of attorney, at the preliminary agreement, and at the choice of settlement bank. Advice sought after any of those three is remedial rather than preventive, and costs more for less.
Which seller are you?
Status is not one fact. It is about ten, and they are routinely run together. You may simultaneously be a citizen of the Russian Federation; a citizen of the United States; a currency resident of Russia under Law No. 173-FZ; a tax non-resident of Russia under the day-count; a tax resident of the United States; a U.S. person for sanctions purposes; and either inside or outside the definition of an "unfriendly person" under Presidential Decree No. 81.
None of these determines any of the others. Russian currency residence turns on citizenship and residence permit and has nothing to do with day-count. Russian tax residence turns on day-count and has nothing to do with citizenship. Sanctions status turns on citizenship, permanent residence or physical presence in the United States.
Any document that tells you "you are a resident" without saying of what, and for what purpose, has told you nothing.
The permission regime, and why it is decided here rather than later
Presidential Decree No. 81 subjects transactions in real property involving an "unfriendly person" to a permission issued by the Government Commission. Three features make it decisive.
It is direction-neutral — it applies whether the U.S.-connected person is the buyer or the seller, which is the point most often missed. The United States is on the list of unfriendly states. And the analysis reaches backwards: the regime extends to property acquired after 22 February 2022 from an unfriendly person, so a defect in the previous link of your chain of title is your problem now, and your buyer's problem later.
For Profiles B and C — the bulk of this practice — the position is a reasoned legal position with an identifiable counter-argument, not an administrative safe harbour. That is why the file contains, before the power of attorney is commissioned: a signed and dated clearance memorandum applying the analysis to your own facts; where obtainable, written confirmation from the intended certifying notary; where obtainable, the position of the specific territorial registry office; and a contingency plan with a timeline in case either declines.
Because a permission takes months, that contingency has to exist before the transaction has a closing date.
The starting service: Pre-Sale Feasibility Assessment
A written assessment of the principal obstacles, the information still missing, any permission required, preliminary banking feasibility, and the recommended next steps — concluding in a dated determination: go, conditional go, or no go.
It is useful whatever the answer. It is equally a result to learn that title should be cleaned up first, that the arrangements proposed to you should be changed, that the sale should be timed differently, or that you should not sell at all. It is a complete deliverable on its own, and clients regularly take it to another adviser to execute. That is fine.
PREPARING AND PROTECTING YOUR REMOTE SALE
The register records rights. It does not record all defects.
An extract from the register is the first document everyone obtains and the source of most of the false confidence in this practice. It will not show:
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a person holding a lifetime right of residence because they declined to take part in the privatisation
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undischarged obligations to allocate shares to children where family capital was used
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unauthorised alterations to the premises
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an heir who accepted an inheritance by conduct and never registered anything
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a matrimonial interest, where the property was acquired during a marriage regardless of whose name appears on the register
These are the defects that produce invalidation — sometimes years after closing, at the suit of a person who was never a party to the sale. For each one there is a different document that will disclose it: the archival statement of everyone ever registered, the family capital certificate, the succession file, the technical documentation compared against an inspection, and searches of the insolvency register, the enforcement database, the courts and the tax authority, re-run immediately before closing.
Running that matrix is what the diligence stage produces. Every item is simultaneously a defect search and evidence that the search was performed — which is why it protects you as much as it protects the buyer.
Where inheritance complicates a sale
Inheritance is one of the most common starting points and one of the most common sources of latent defect: a mandatory share, an heir who never formalised acceptance, a six-month period that was missed, a certificate that does not match the register, or property the heir may not lawfully hold at all.
The inheritance questions that arise inside a contemplated sale are handled here. The procedure for claiming an inheritance in Russia, and the deadlines that govern it, are set out separately.
Authority: you will not be in the room, so someone has to be
The power of attorney is the instrument the whole transaction rests on, and it is the point at which remote sales most often fail quietly.
Scope, and three instruments rather than one. Authority is matched to the contemplated sale, the registration steps and the settlement arrangements. Drafted too broadly, the power is refused by notaries and banks. Drafted too narrowly, it fails at the registration counter after the buyer's money is already committed.
Authentication. There is a real difference between a consular instrument and a New York notarial act with apostille and certified translation — and the difference is not formality. It is what the receiving notary and the specific territorial registry office will actually accept. That is established in advance with the institutions involved, not assumed.
The self-ban and the biometric regime. Two things can render an otherwise perfect power of attorney worthless. A self-imposed ban recorded against the owner means the representative cannot act on it at all. Biometric identification requirements can mean a step requires the owner's personal attendance — which for someone six thousand miles away is the whole problem. Both are checked before the power of attorney is commissioned.
Term, revocation and third parties. Authority subsists until revocation is registered, and third parties may rely on it meanwhile. A representative who has simply gone quiet is therefore not a communication problem — it is an open authority. The correct response is to revoke, register, and apologise afterwards if the explanation turns out to be innocent. The register entry is cheap and reversible; an unauthorised disposal is neither.
Death, incapacity, change of mind. Authority ends at death. What happens to a transaction caught mid-flight depends on whether registration had completed — a question worked out before anything is signed rather than after.
Also prepared at this stage: spousal consents with an affirmative statement as to any marital agreement, or the division instrument where you are divorced; guardianship consents where a minor holds an interest; pre-emption waivers where the interest is fractional; and the related declarations, with execution instructions, apostille, certified translation and delivery.
Contract terms that account for an absent seller
Preliminary arrangements and sale terms are drafted or reviewed against the exposures a standard Russian contract does not address: payment and registration conditions, what happens on suspension or refusal of registration, default, possession and handover, seller representations, and the timing relationship between the settlement instrument's expiry and the registration cure window — which is where transactions that have survived everything else go on to die.
What the buyer needs from you
To a Russian buyer, a seller in the United States is a bundle of risks: a possible challenge to the validity of the power of attorney, a counterparty who cannot conveniently be sued, a payment chain of uncertain legality, and a transaction their own lawyer has warned them about.
Buyers tend to price those risks — in the offer, in the pace of negotiation, or in the concessions they ask for late.
The purchaser assurance package is not a set of concessions extracted by a nervous buyer. It is an organised answer to those concerns, assembled almost entirely from diligence being done for your own protection anyway. The purpose is a transaction the buyer and their advisers can evaluate on evidence rather than on assumption.
It protects you in the same motion. A file showing that capacity was verified, that the archival statement was obtained and acted upon, and that the full price passed through a traceable instrument is your defence against a later claim by an heir, a former spouse, or a trustee in insolvency.
Two documents in that package are the differentiators, and no Russian conveyancer produces either — because neither is within a Russian practitioner's competence:
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A clearance memorandum under Decree No. 81 covering both the present transaction and the prior link in the chain of title.
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A memorandum on the seller's United States status — explaining why divestment of a pre-existing investment is not prohibited new investment, and therefore why the seller's status does not imperil the buyer's performance.
Those answer the two questions the buyer cannot answer for themselves.
The whole is delivered as a bound set, before signature, with a covering schedule the buyer signs acknowledging receipt. That single page does double work: for the buyer it is contemporaneous proof of the diligence required of them; for you it is proof of what was disclosed and when, foreclosing any later allegation of concealment.
On whose behalf. Where I act for the seller, preparing material the buyer will read does not make the buyer my client, and it is not an opinion the buyer may rely on as their own advice. Any formal third-party reliance is a separate question, addressed separately and in writing.
SANCTIONS, SETTLEMENT, AND RECEIVING THE PROCEEDS
The United States sanctions position
Most material written for owners treats sanctions as a warning to the seller. That is the wrong emphasis, and it costs money — because the party who most needs a sanctions answer is the buyer, whose willingness to pay full price depends on being satisfied that your United States status will not interrupt or invalidate performance halfway through.
The analysis opens with the proposition that is both accurate and reassuring: divesting a pre-existing investment in Russia is not itself prohibited new investment. The prohibitions restrict the making of new investment; they do not, of themselves, prevent a United States person from selling out of a position already held. (OFAC FAQ 1053; FAQ 1049 for the definition.)
Three qualifications belong in the same breath. The transaction must not involve a blocked person or any other prohibited dealing. A United States person may facilitate a seller's divestment but may not facilitate prohibited new investment by the buyer — a distinction that catches advisers, because identical conduct may be permissible from the seller's side and prohibited from the buyer's. And the proceeds must not be applied to a prohibited new investment, which is live for anyone intending to buy replacement property in Russia.
Screening a single name is not screening
The perimeter includes both principals; every representative acting under a power of attorney, together with the estate agent and any introducer — the category most often left out; beneficial owners where either side is an entity; the Russian settlement bank, every intermediary and correspondent in the payment chain, and the receiving bank in the United States, whose own restrictions may exceed what regulation requires; and the conduct of United States counsel itself.
The ownership rule requires attention in this market: an entity owned fifty per cent or more in the aggregate by blocked persons is itself blocked whether or not it appears on any list, and aggregation across several shareholders none of whom individually reaches the threshold is expressly within the rule.
Screening is not an intake task. Designations take effect on publication. A transaction screened clean in March and settled in September has been screened once, at a date that no longer matters. Screens are re-run and file-noted at intake, before the power of attorney issues, before the preliminary agreement, before the settlement instrument opens, before disbursement, and before the outbound transfer.
The settlement instrument is selected at the beginning of the transaction, not at the end, because one of its by-products is the evidence your United States bank will later ask for. Documentary release conditions are drafted against the registration outcome, and the consequences of suspension, refusal, expiry, bank rejection or changed payment instructions are addressed in the drafting rather than discovered.
One point that catches otherwise well-run transactions: where a safe-deposit box is used for settlement, there is no document showing that the money came from the buyer for the property — and no substitute for it exists. That gap surfaces months later, at the receiving bank, when nothing can be done about it.
A misconception worth correcting. Practitioners frequently describe the type "C" account as the central risk for a U.S.-connected seller. In the ordinary case it is not. Decree No. 95 catches obligations arising from credits, loans and financial instruments; a buyer's obligation to pay a purchase price is not, on the face of the decree, one of those. It becomes relevant by two routes instead: where drafting converts the deferred price into a loan or a promissory instrument, and where a Government Commission permission attaches conditions on the destination and currency of the proceeds. It is downstream of the permission question, not parallel to it.
Getting the money out
It is commonly said that there is no route between a Russian bank and a United States bank. As a general statement that is too categorical, and it does real harm — it pushes owners toward exactly the structures they should be avoiding.
The right question is specific: which non-sanctioned Russian bank, into which account in your own name, in whichcurrency and jurisdiction, with what documentary trail behind it — confirmed with each institution rather than assumed.
Legality and availability are different questions. A transaction may be entirely lawful and still find no institution willing to carry it. A regulatory permission is not a route. A boring, fully documented transfer between accounts in your own name is worth a great deal more than an ingenious one.
The source-of-funds file
An unannounced inbound wire of several hundred thousand dollars from a Russian institution is, to a monitoring system, an anomaly with no explanation. The same wire, preceded by a memorandum and a document schedule lodged with the relationship manager, is an anticipated event with a file behind it.
The memorandum does not bind the bank and does not prevent a report. What it changes is what the analyst sees when the alert fires — and that is the only part within anyone's control.
The file is assembled during the transaction, not reconstructed afterwards. Every item is generated by something already being done for another reason:
chain of title from acquisition · evidence of the acquisition price or mode of acquisition · register extracts, current and transfer-of-rights · the contract with certified translation · evidence of registration of the transfer · the settlement instrument and evidence of its operation · Russian tax computation and payment evidence, or the exemption analysis · sourced exchange rates on both dates · screening memoranda for every party and institution · a transaction memorandum tying it together
Clients who are exempt from Russian tax resist assembling that seventh item, because they believe there is nothing to show. But the exemption analysis is itself the document, and its absence leaves an unexplained gap exactly where a tax payment would normally sit.
You will also be told in advance that the receiving institution operates under the Bank Secrecy Act, may be required to file a report, and is prohibited from telling you that it has done so. Someone who learns this beforehand understands what is happening and does not make it worse by escalating. Acceptance of any transfer remains the institution's own decision, dependent on its current legal, compliance and operational requirements.
If something has already gone wrong
Most of the damage in this area is done by the response rather than by the event.
Establish the facts before acting. Do not move money — not to another account, not to another institution, not back. Do not let the representative resolve it, because the representative's authority was drafted for the ordinary course. Do not create documents describing past conduct without separate advice. Write the note today, because what was known and when becomes the question in every one of these.
Handled on an expedited basis: a payment that has not arrived, rejected or blocked · registration suspended or refused · a representative who cannot be reached · a power of attorney expired or revoked · a party designated mid-transaction · a self-ban discovered · the seller has died · the buyer's mortgage declined · an account closed or funds returned.
RUSSIAN AND UNITED STATES TAXES AND REPORTING
What this section is for
Not a lecture on the Internal Revenue Code. An answer to two questions: what you expect to net after tax in both countries, and which records and filings have to exist to support that result.
The second matters more than owners expect, because the record is built during the transaction. It cannot be assembled afterwards from memory.
The Russian and United States analyses are run together, because each one's outcome is an input to the other. A Russian exemption changes the United States credit position; the United States basis question determines whether a Russian holding-period exemption is worth anything to you.
What gets examined
Timing. Whether selling now or later changes the expected net proceeds — including Russian tax residence by day-count, which is a fact you may still be able to influence.
Basis. Whether the records support the basis you intend to claim. Property acquired by purchase, privatisation, inheritance, gift or construction each produce a different analysis, and for three of those the ordinary evidence does not exist.
Inherited and gifted property. The United States treatment, and the Form 3520 position — which owners frequently discover only when it is a correction rather than a filing.
Use. What rental use and depreciation do to the calculation, and to eligibility for the principal-residence exclusion.
Currency. Translation on both dates, and the separate treatment of foreign-currency liabilities — the single most common source of a result clients did not expect.
Foreign tax credits. Whether they are available, and whether they are actually usable against the liability you have.
New York and other state consequences, which depend on domicile and are not the same question as the federal one.
Reporting. FBAR, FATCA and the information returns that attach to the accounts and the transaction.
Entities. Where property is held through a Russian company, two different transactions are available — the company sells the property, or you sell the participation interest. They have nothing in common in their United States tax profile, and the choice between them is the first question, not a detail.
Earlier omissions. Where prior years were missed, which correction procedure fits.
What you get
These are matters I examine on your facts, not outcomes promised in advance. Where the analysis is favourable it still has to be documented — an exemption with no supporting file is, to a bank or a revenue authority, indistinguishable from an omission.
The filing work is included where you want it. Returns, information returns and correction procedures are prepared and filed within the agreed engagement, as an Enrolled Agent admitted to practise before the Internal Revenue Service. The involvement does not stop at a consultation and a memorandum.
Viacheslav Kutuzov
VIACHESLAV KUTUZOV, Esq.
New York Attorney & Counselor-at-Law (6192033)
New York Licensed Foreign Law Consultant for Russia (5641899)
admitted to practice before the IRS (No.00144810-EA)
55 Broadway, Floor 3, New York, New York 10006
Phone: +1 646 8374669
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