Mongolia is a country located in Central Asia,  neighboured by Russia and China. It is the 18th largest country in the world but sparsely populated with 2.79 million people, making it one of the least densely populated areas in the world. Mongolia has affluent mineral resources and the largest steppe area on the planet. Almost half the population is engaged in agriculture and herding and the urban population is primarily located in the capital, Ulaanbaatar as well as a few other large towns. Transportation, communications services and infrastructure are limited and the major industries outside of agriculture, mining and tourism are cashmere processing, food processing, and construction materials.  
The Mongolian economy experienced a harsh transition to a free market economy in 1990, coinciding with the collapse of the Soviet Union. It was at this time that Mongolia underwent a democratic revolution which has remained the guiding principal of this free and democratically governed country. Although rebuilding the economy in the 1990’s was not an easy task, by the year 2000 the Mongolian economy started showing signs of significant growth in a number of sectors.

With Ulaanbaatar (1.6m people) as the capital and epicentre for economic activity, the modern day Mongolia is a country currently undergoing an economic renaissance underpinned by vibrant mining, tourism, and cashmere manufacturing activity. Its emerging role as a provider of raw materials to China’s constantly growing economy is transforming this small city into an energetic and lively star for years to come.

Real Estate Ownership Laws

At this current time there are no restrictions placed on foreigners owning property in Mongolia. The current restrictions in place apply in equal measure to Mongolians and foreigners. It is important to note that it is practically impossible to own land in the legal sense of the term, most land in the city has a renewable long term lease. Once an immoveable structure (i.e a building) is constructed on the land it becomes an immoveable property (ownership of which is freehold). The land can be returned to the government at the end of the lease without any changes to the freehold ownership. Upon approval of a construction by the government, every landlord is issued with an ownership certificate which can be used as collateral in banks and other financial institution; the certificates are also valid in any court of law. Neither the Government nor any other legislative body can evict landlords or confiscate property in Mongolia. The freehold properties have similar legal protection as can be found in Europe or the USA.

Foreign Exchange Restrictions

There are no presently no restrictions applicable on Foreign Exchange transactions. There are also no restrictions placed on the flow of foreign capital in or out of the country. The currency risk associated with Mongolia is relatively low as both the economical and political sectors are stable.

 Real Estate Fiscal Environment

At this present time the fiscal environment surrounding the real estate market in Mongolia are very beneficial to investors. There is a 10% VAT which is applicable but has so far never been collected. There are no capital gains taxes or any rental income taxes applicable. No taxes are applied on privately held property nor on purchases of off plan developments. There is a 2% sales tax which is applicable upon the sale of a completed property; this tax is normally split between the buyer and the seller.

Mongolia is one of the few functioning democracies in North East and Central Asia; as such, it serves as a model for other post-communist and post-authoritarian societies still striving to democratize.

PeregrineLaw have sourced the best legal experts to advise you in Mongolia, who come highly recommended both by the European Bank for Reconstruction and Development (EBRD) and the American Embassy.