Real Estate Acquisition in RA
Armenia presents a compelling destination for investors and individuals seeking to reside in the country. Its appeal lies in its economic growth, rich cultural heritage, natural beauty, distinctive cuisine, low taxation, safety, and the increasing value of properties in central Yerevan. Moreover, Armenia permits foreigners to own real estate with potential investment opportunities and tax advantages. The country's low crime rate and the absence of taxes on real estate transactions, capital gains, gifts, or inheritances enhance its attractiveness. Real estate investments may also lead to immigration benefits, such as residence permits and potentially citizenship.
Nonetheless, considering real estate investments in Armenia requires careful planning and due diligence. Engaging a local lawyer with expertise in the field can be invaluable. They can assist with navigating the intricacies of the investment process, reviewing and preparing necessary documents, facilitating payments, and ensuring proper registrations.
There is no restrictions by Foreigners to Acquire Real Estate in Armenia.
According to official statistics published by the Cadastral Office, the real estate market in the center of Yerevan has demonstrated significant growth, with a notable increase in the last year. From April 2023 to March 2024, average prices per square meter in the city center rose from $2,102 to $2,295, reflecting a 9.2% annual increase. This steady upward trend is part of a larger surge observed over the last decade, where prices soared from $1,021 in 2012 to $2,073 in 2023, totaling a 103% increase. This growth was particularly marked by a dramatic 42.4% rise from 2021 to 2022.
1. Lower Mortgage Rates: Interest rates dropped from 18% to around 10.5% and are expected to decrease further.
2. Rising Rental Demand: Tourism and urbanization drove higher demand for rental properties.
3. Shift from Bank Deposits: Real estate became a more attractive investment due to declining deposit interest rates.
4. Limited New Construction: Central Yerevan experienced limited new dwelling construction.
5. Growing Economy: Armenia's GDP grew by 8․7% in 2023.
Foreign Ownership of Real Estate :
Foreigners enjoy unrestricted ownership rights when it comes to real estate in Armenia. They have the full spectrum of privileges, including acquisition, retention, leasing, sale, inheritance, and other property-related activities, on an equal footing with local residents. Remarkably, there's no obligation for foreigners to secure a residence permit or demonstrate any specific ties to Armenia.
Moreover, investing in real estate can open doors to securing a temporary residence permit in Armenia in Armenia, enhancing the appeal of property investment for foreign individuals. However, it's important to note that there is a unique restriction on foreign ownership that applies solely to agricultural land. To navigate this restriction, foreign investors may need to establish a legal entity and acquire agricultural land under the entity's name.
Alternatively, foreign individuals with special residency status in Armenia are permitted to directly own agricultural land.
Benefits of Real Estate Acquisition :
1. 100% Foreign Ownership
Armenia welcomes foreign investors with open arms, allowing them to have complete ownership of real estate properties. Whether you want to acquire, hold, lease, sell, bequeath, or otherwise manage your property, you enjoy the same rights as local residents. There's no need for a residence permit or any specific ties to Armenia. Even agricultural land can be owned through a legal entity.
2. High Appreciation Rates
Investors in central Yerevan witnessed a remarkable increase in property values, with a notable 34.5% surge in 2018-2019. This uptrend is attributed to a growing economy and declining mortgage rates, making it a lucrative market for potential appreciation.
3. High Rental Yield
Armenia's flourishing tourism industry is driving strong demand for rental properties. This sector's vitality translates into attractive rental yields for property owners.
4. Fast & Secure Registration
Streamlined processes make buying property in Armenia exceptionally efficient. The country ranks 13th out of 190 nations on the World Bank's "Registering Property" index, signifying both the speed and reliability of its property registration system. Notably, it is even possible to purchase properties remotely without visiting Armenia.
5. No Gift or Inheritance Taxes
Armenia stands out as a tax-friendly destination. It imposes no gift or estate taxes, offering investors more flexibility in managing their assets.
6. No Tax on Capital Gains
Individuals selling real property in Armenia typically enjoy tax exemptions on capital gains, further enhancing the attractiveness of property investments.
7. Low Property Taxes
Property taxes in Armenia are notably reasonable, typically ranging from 0% to 1% of the cadastral value, which tends to be lower than market prices.
8. No Stamp Duties
Unlike many other countries, Armenia imposes no stamp duties on property transactions. Only modest official fees are applicable, unrelated to the property's value.
9. Residency & Citizenship Opportunities
Armenia extends residency options, including temporary and permanent residency, along with special programs designed for foreign businesspeople. Additionally, investors in real estate may qualify for citizenship-by-exception, making Armenia an enticing destination for those seeking immigration benefits.
Notary & Registration Fees: By convention, the buyer typically covers notary fees and official registration fees, which can range from $200 to $600. These fees are fixed and do not depend on the property's value. Fast-track services are available for an extra cost.
|
Service |
Regular Fee |
Fast-Track (Same Day) |
Fast-Track (Next Day) |
Fast-Track (Three Days) |
|---|---|---|---|---|
|
Notary Fee |
US$21-31 |
N/A |
||
|
Notarization Government Fee |
US$10 |
N/A |
||
|
Clean Title Certificate Fee |
US$21 |
US$125 |
US$ 41 |
N/A |
|
Ownership Registration Fee |
US$52 |
US$313 |
US$156 |
US$105 |
|
Registration Government Fee |
US$41 |
N/A |
||
Capital Gains Tax: Transfers of residential property between individuals are usually exempt from capital gains tax, provided both the buyer and seller are individuals (not registered as private entrepreneurs). In such cases, the tax rate on capital gains from residential property sales is 0%. However, if the buyer is a legal entity or a private entrepreneur, a 10% withholding tax may apply to the entire transaction amount.
Sales Tax for Developers: Individual real estate developers are subject to a 20% sales tax, calculated based on the selling price of the properties they develop.
Real Estate (Property) Tax: Property owners must pay an annual real estate tax. Tax rates range from 0% to 1% of the cadastral value, often lower than the market value. Property tax amounts can be checked on the Cadastre's website. Recent regulations require sellers to obtain a certificate confirming the absence of tax liabilities from the local municipality before registering the sale.
Rental Income Tax: Rental income below 60 million Armenian drams (approximately US$140,000) per year is taxed at a rate of 10%. Income exceeding this threshold faces a 20% tax rate.
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Effective December 1, 2023, an amendment to the Tax Code of the Republic of Armenia has been enacted. According to this amendment, failure to declare and remit taxes for the rental of real estate will result in a fine for the lessor. The fine is set at 5 percent of the cadastral value of the property, assessed in accordance with the law and approximated to the market value, with a cap at AMD 500,000. In the event of a repeated violation within one year of the initial penalty, a subsequent fine will be imposed at 10 percent of the cadastral value of the immovable property, again estimated in accordance with the law and approximated to the market value, but not exceeding one million drams.
Stamp Duty, Inheritance & Gifts Taxes: Armenia does not impose stamp duties, gifts, or inheritance taxes.
Communal Charges: Property owners, especially in apartment complexes, are responsible for maintenance and service charges, which vary based on property size, quality, and available amenities, such as lifts, pools, gardens, and other facilities.