Mutual funds
Which Russian mutual funds (PIF) suit real estate: buying and letting property, land deals, off-plan rights under 214-FZ and lending. Taxes on entry, holding and exit, and how the management company is supervised.
A Russian mutual fund (PIF) pays no profit tax, its property is ring-fenced from the management company, and a specialised depositary checks every transaction. That is why PIFs are used to hold rental buildings, develop, buy land and off-plan rights under Law 214-FZ, and lend against property. But not every fund fits every task: the law and the Bank of Russia set strict rules on what a fund may own. Below: which fund suits which purpose, what taxes arise on entry, holding and exit, and who supervises the management company.
Law as of November 2026. This overview is not a substitute for tax and legal review of a specific deal.
Why hold property in a mutual fund
- Asset protection
Fund property is ring-fenced from the assets of the management company and of the unit holders (Art. 15 of 156-FZ). A unit holder's creditors can claim only the units, not the fund's buildings. If the manager goes bankrupt, fund property stays out of the bankruptcy estate. Debts incurred in managing the fund are paid from the fund, and if it falls short the manager is liable with its own assets, not the unit holders (Art. 16). The depositary approves every off-exchange transaction.
- Unit holder confidentiality
The fund is not a legal entity and is not in the companies register. In the land register the owners are recorded as the unit holders of a given fund, with their identities determined by the register of unit holders (Art. 15(2.1)). The register is kept by a registrar or the depositary; information from it goes to the unit holder and to authorities entitled to it by law, such as the central bank, courts, tax and law enforcement bodies.
- Taxes
A ZPIF pays no profit tax: rent, loan interest and gains on selling property are untaxed inside the fund. Tax arises for the unit holder when interim income is paid or units are sold or redeemed. Property tax, land tax and VAT are paid by the manager out of the fund. From 2027 this may change for some funds; see the tax section.
- Governance
The fund is run by a licensed management company under the fund rules (156-FZ). Key decisions, including changes to the rules and extending the fund's term, are taken by the general meeting of unit holders (Art. 18). In a qualified fund the rules may give an investment committee of unit holders' representatives the power to approve transactions.
- Dealing in units
Units are recorded on accounts in the register of unit holders (Art. 14), so a stake in a building can be sold by transferring units through the registrar, without a deal over the building itself or a land register entry. On redemptions and income payouts the tax agent is the manager, or the broker if the broker filed the request (Tax Code Art. 226.1). On an exchange sale the broker withholds tax; on an off-exchange sale an individual seller declares the income.
Which fund for which task
Real estate funds database →allowedwith limitsnot allowedThe condition is given under each mark.
| Open-end, exchange-traded, interval (OPIF, BPIF, IPIF)Open / ETF / interval | Real estate ZPIF for all investorsRE ZPIF retail | Real estate ZPIF for qualified investorsRE ZPIF qualified | Combined ZPIF for qualified investorsCombined qualified | |
|---|---|---|---|---|
| Buy completed flats and parking spaces | Real estate may be held only by closed-end funds (Art. 33(2) of 156-FZ) Open / ETF / interval | Residential units and parking spaces, including shares in them RE ZPIF retail | Any real estate RE ZPIF qualified | Any assets except cash Combined qualified |
| Buy a commercial building to let | Only indirectly: shares and bonds of companies Open / ETF / interval | Only completed buildings and premises: at least 40% of the lettable area leased on average last year and an appraiser with a 10-year record and at least RUB 100m in property valuation revenue; or a new building under 2 years old with at least 80% of the area let for 2+ years RE ZPIF retail | Any real estate and leasehold rights RE ZPIF qualified | Directly or through shares in the owning company Combined qualified |
| Build or redevelop | Open / ETF / interval | Only through off-plan rights to residential and apartment buildings RE ZPIF retail | Rights under construction contracts on the fund's land, redevelopment, design documentation RE ZPIF qualified | Any structure, including stakes in the project company Combined qualified |
| Buy off-plan rights (Law 214-FZ) | Open / ETF / interval | Residential and apartment buildings only RE ZPIF retail | Any type of property RE ZPIF qualified | Any type of property Combined qualified |
| Buy bare land, build a land bank | Open / ETF / interval | Only plots under the fund's buildings, plus adjacent plots for access, parking and utilities, up to 20% of the main plots' area RE ZPIF retail | Land plots and land leases RE ZPIF qualified | Plots or stakes in owning companies Combined qualified |
| Sell a plot to a developer | Open / ETF / interval | Only together with the building on it RE ZPIF retail | Land sales are VAT-exempt RE ZPIF qualified | Sale of the plot or of the owning company Combined qualified |
| Lend against property | Monetary claims may be held only by closed-end funds Open / ETF / interval | Not on the permitted list RE ZPIF retail | Claims under loan agreements are expressly excluded RE ZPIF qualified | Loans and purchased claims, including mortgage-backed Combined qualified |
| Own stakes in property-owning companies | Only securities within the category rules Open / ETF / interval | RE ZPIF retail | RE ZPIF qualified | LLC stakes and JSC shares with no category limits Combined qualified |
| Raise money from retail investors, list units | Units are offered publicly Open / ETF / interval | Many funds trade on the Moscow Exchange RE ZPIF retail | Units may not be offered to non-qualified investors or advertised RE ZPIF qualified | Qualified investors only Combined qualified |
Types of mutual funds
Open-end (OPIF)
Units can be redeemed on any business day. Assets: securities and cash. Real estate, property rights and monetary claims are prohibited.
Exchange-traded (BPIF)
Units trade on an exchange, with a market maker keeping the price close to net asset value. Assets are as for an open-end fund, usually tracking an index.
Interval (IPIF)
Units are redeemed at intervals set in the fund rules. Real estate and monetary claims are prohibited.
Closed-end (ZPIF)
Units are redeemed when the fund terminates or by decision of a general meeting of unit holders. Only closed-end funds may hold real estate, property rights and monetary claims. Units can be sold on the secondary market, including on an exchange.
Two categories: market financial instruments and real estate. The fund rules are registered by the Bank of Russia, permitted assets are a closed list (Ordinance 4129-U, para 2.4) and concentration limits apply.
Three categories: financial instruments, real estate and combined. A combined fund may hold any assets except cash (para 2.8). The rules are approved by the specialised depositary and filed with the Bank of Russia for entry in the register.
A separate category from the former classification; the Bank of Russia register still counts rental funds separately. Under Ordinance 4129-U it is a real estate fund, usually with completed let property and regular payouts.
Investor tasks
- Buying completed property
A retail fund suits housing and commercial buildings with proven rental income. It cannot buy an empty building or one more than 60% vacant. A qualified real estate fund has no occupancy requirements.
- Rental property
Rent flows into the fund free of profit tax, and unit holders receive interim income under the fund rules. Since 1 March 2026 a fund earning income from the use of its property need not list in its investment declaration the ancillary property needed to run the building. The fees of the manager, depositary, appraiser and auditor are paid by the fund.
- Land: buying and selling
Land banks are built in a qualified real estate fund or a combined fund, directly or through project companies. Land sales are VAT-exempt, and land tax is paid by the manager out of the fund. A retail fund holds land only under its own buildings.
- Off-plan rights under 214-FZ
The fund buys flats or premises at an early stage under shared-construction agreements and sells them once the building is complete. The buyer's money goes into an escrow account, the developer's services under such agreements are VAT-exempt, and so is the sale of completed housing. A retail fund may buy rights only to residential and apartment buildings.
- Lending against property
Only a combined ZPIF for qualified investors can lend: monetary claims are allowed only in closed-end funds, and a qualified real estate fund is barred from holding loan claims. The fund itself may not borrow, except to fund unit redemptions up to 20% of net assets for up to 6 months; the Bank of Russia may set exceptions for qualified funds.
- Development
A qualified real estate fund may own the plot, the design documentation and rights under construction contracts. A combined fund adds stakes in project companies and loans to them. Project profit accumulates in the fund tax-free until it is paid out to unit holders.
Taxes on entry, holding and exit
| Tax | Entry | Holding | Exit |
|---|---|---|---|
| VAT | The management company bears the taxpayer's duties on transactions with fund property (Tax Code Art. 174.1) and recovers input VAT. Land and housing are sold VAT-free (Art. 146(2)(6), Art. 149(3)(22)); the developer's services under shared-construction agreements are exempt (Art. 149(3)(23.1)). Whoever contributes property in exchange for units restores the VAT previously recovered (Art. 170(3)(1)). | Leasing non-residential property: 22% from 2026 (Art. 164(3)). Residential leases are exempt (Art. 149(2)(10)). | Sale of a non-residential asset from the fund: 22%; housing and land: VAT-free. Sale and redemption of units are exempt (Art. 149(2)(12)). |
| Profit tax | The fund is not a legal entity and pays no profit tax. According to Ministry of Finance guidance, contributing property in exchange for units creates no income for a company. | A corporate unit holder pays 25% (Art. 284) on interim income when it is paid out. Income accumulated inside the fund is not taxed. | 25% on the difference between proceeds from selling or redeeming units and their acquisition cost. |
| Personal income tax | Buying units for cash creates no tax. | Interim income is taxed at 13% up to RUB 2.4m of investment income a year and 15% above (Art. 224(1.1)); the management company withholds it. | The same 13/15% on the gain. For exchange-traded units held over 3 years, a deduction of up to RUB 3m per year of ownership applies (Art. 219.1). |
| Property tax | — | Paid by the management company out of fund property, not by unit holders (Art. 378(2)). Up to 2.2% of average annual value or up to 2% of cadastral value, up to 2.5% for assets with a cadastral value above RUB 300m (Art. 380). | — |
| Land tax | — | Paid by the management company out of fund property (Art. 388). 0.3% or 1.5% of cadastral value depending on the plot's use (Art. 394). | — |
Bill No. 617-9 (passed by the State Duma at first reading on 29 October 2026) would impose a 15% tax from 2027 on the passive income of closed-end and interval funds: dividends, interest, rent. According to press reports, an exemption for funds that pay out almost all of their income to unit holders is being discussed ahead of the second reading set for 19 November. Until the law is passed, the regime described above applies. This page will be updated once it is.
Who supervises the management company
Only a licensed management company may manage a mutual fund (Art. 38 of 156-FZ). The central bank sets requirements for capital, executives and internal control and can revoke the licence.
The rules of a retail fund and any changes to them are registered by the Bank of Russia. The rules of a qualified fund are approved by the specialised depositary and filed with the central bank for entry in the register of mutual funds (Art. 19).
Keeps custody and records of fund property, monitors compliance with the law and the rules, and consents to every off-exchange transaction with fund property (Arts. 40 and 43). Without its signature the manager cannot move money or assets.
Real estate and property rights are valued by an independent appraiser named in the rules: on acquisition and at least once a year (Art. 37). The appraiser may not be affiliated with the manager, depositary or auditor, and the manager is secondarily liable for losses caused by the appraisal. Qualified funds may skip valuation except where the central bank or the rules require it.
What a fund may hold is set by Art. 33 of 156-FZ, the investment declaration in the rules and Bank of Russia Ordinance 4129-U. Buying an asset outside the list is prohibited.
The manager may not give fund property away, borrow beyond the redemption limit, pledge fund property for debts unrelated to managing the fund, or deal with affiliates. In a qualified fund, related-party deals are allowed if the rules expressly provide for them (Art. 40(10)). For a deal made in breach, the manager is liable with its own assets.
Fund property belongs to unit holders in common shared ownership and is ring-fenced from the manager's assets. The general meeting decides key matters, and a qualified fund may have an investment committee. Since 1 March 2026 a qualified ZPIF may issue classes of units with different income and voting rights (Art. 14.1-1).
What changed in 2026
- 1 January 2026
VAT rose from 20% to 22%, including on leases and sales of non-residential property from funds. The asset threshold for individuals to become qualified investors is RUB 24m.
- 1 March 2026
Most of the amendments of Law 532-FZ took effect: unit classes in qualified ZPIFs, the option not to keep a qualified fund's property with the depositary if the rules allow, and ancillary property for running buildings without listing it in the investment declaration.
- 4 October 2026
Bank of Russia Ordinance 7330-U updated the list of real estate allowed in retail funds and the requirements for let property.
- 29 October 2026
The State Duma passed at first reading Bill No. 617-9 on a 15% tax on the passive income of closed-end and interval funds from 2027. The second reading is set for 19 November.
Questions and answers
Can I invest in a real estate ZPIF without qualified investor status?
Yes. Real estate funds for all investors exist, and units in many of them trade on the Moscow Exchange. Their list, assets, net assets and payouts are in the real estate funds database. Real estate funds database →
Why do developers and family offices choose a combined ZPIF?
It may hold any assets except cash: buildings, land, stakes in project companies, loans. Profit inside the fund is untaxed until paid out, the property is ring-fenced, and the depositary checks transactions. The price is the cost of the fund infrastructure and access for qualified investors only.
Can a fund buy property with a loan?
As a rule, no: the law prohibits a fund from borrowing, except to fund unit redemptions within 20% of net assets for up to 6 months (Art. 40(1)(5) of 156-FZ). The Bank of Russia may set exceptions for qualified funds. In practice debt is raised by a project company owned by a combined fund.
Can property be contributed to a fund instead of cash?
Yes, if the rules of a closed-end fund allow units to be paid for in kind. The asset is valued by an appraiser. A company contributing the asset restores the VAT it previously recovered.
How is a PIF better than owning property directly?
Profit tax is deferred until payout, the property is ring-fenced from the debts of the manager and unit holders, the depositary and appraiser provide independent control, and units can be sold instead of the building. The downsides: manager and infrastructure fees, limits on permitted assets, and a possible fund-level tax from 2027.
Primary sources
Real estate funds database →- Federal Law No. 156-FZ of 29.11.2001 "On Investment Funds": Arts. 11, 14.1-1, 15, 19, 33, 37, 38, 40, 43 (as amended by 532-FZ and 283-FZ)
- Bank of Russia Ordinance No. 4129-U of 05.09.2016 on the composition and structure of investment fund assets (as amended by Ordinance 7330-U, from 04.10.2026)
- Russian Tax Code: Arts. 146, 149, 164, 170, 174.1, 214.1, 219.1, 224, 284, 378, 380, 388, 394
- Federal Law No. 39-FZ of 22.04.1996 "On the Securities Market": Art. 51.2 (qualified investors)
- Federal Law No. 214-FZ of 30.12.2004 on shared-construction agreements
- Bank of Russia register of mutual funds