Analysts over the past five years have noted an increase in taxes on luxury real estate from an average of 3 to 20% worldwide. However, there are still a number of countries where real estate taxes are either absent or minimal. Here is a list of the countries with the highest and lowest taxes on luxury real estate.
Top 5 Countries with the Lowest Taxes
Out of the UAE, investors prefer Dubai. It is a city where there is no property tax, although a one-time fee is charged for its purchase. In 2013, its rate increased from 2 to 4%.
The absence of property taxes makes home ownership in Monaco more attractive for many successful entrepreneurs. However, the absence of taxes is compensated by the high price of the real estate itself – 1 m² in Monaco costs about € 53,425. This is almost twice as expensive as in London, where 1 m² costs € 26,710.
Malta is very popular among expatriates around the world because of the lack of property taxes and inheritance taxes. Instead, the Malta authorities levy a stamp duty and a capital gains tax. Its rate varies from 0 to 35% depending on income.
When buying luxury housing, the taxes in Ireland do not exceed 0.5% of the value of the object. This includes a tax on land and a house, a tax on the entry into the property, a tax on a mortgage loan, as well as the services of a broker.
Sri Lanka has no property taxes, as well as capital gains taxes. The last ones were canceled more than 10 years ago. However, in Sri Lanka, there is a tax on rental income received by non-residents. Its rate is 20%.
Top 5 Countries with the Highest Taxes
For many years, the UK has been leading the world in taxation. Property taxes here account for 12.7% of the total tax burden. These include city tax, stamp duty, inheritance taxes, and capital gains.
The second place in the growth of taxes on luxury real estate is taken by Canada. Here, these fees make up 11.7% of the total taxes. In 2018, the burden increased as Canada imposed a 15% tax on property buyers from abroad.
The largest increase in fees occurred in 2010 – 2013. In addition to the 10% tax for buyers from abroad, there is an 8.5% tax on the purchase of real estate worth more than € 1,780,800.
One of the pioneers of raising taxes on luxury real estate was Singapore – fees here went up sharply in 2010 – 2011, when a 10% tax on the purchase of real estate by foreigners was introduced. In 2013, this tax increased up to 15%, and a 3% tax was imposed on buyers of second homes.
Over the past three years, the authorities have introduced at least five new fees for luxury real estate. The highest tax is the purchase of real estate for foreigners. It is 8% respectively.