Real Estate Capital Gains Tax - A Global Comparison
This week, in our "Wealth Planning" series, we analyse and compare the capital gains tax for the major real estate investment destination countries. This is a follow-up article from last week's "Global Stamp Duty Comparison."
This week we take a closer look at the real estate market and the capital gains tax in 13 countries around the world:
What is Capital Gains Tax?
Capital gains tax (CGT) is a tax levied on the profit from selling an asset, including real estate. The rate for foreign national investors in 2023 can vary between countries and may also depend on the specific circumstances of each transaction.
Here's a list of Capital Gain Tax for the countries we offer mortgages to:
Australia: In Australia, the CGT rate for foreign nationals is determined by the investor's marginal tax rate, which ranges from 0% to 45%. A discount of 50% is available for individuals and trusts if they have held the asset for more than 12 months.
Canada: In Canada, 50% of a capital gain constitutes a taxable capital gain, which is included in the corporation's or the individual's income and taxed at ordinary rates.
Dubai: There is currently no personal income tax in Dubai. As such, capital gains tax is not imposed on UAE nationals or resident individuals.
France: In France, the CGT rate is 30% plus exceptional income tax for high earners at 4%.
Hong Kong: Hong Kong does not have a CGT on real estate.
Italy: Capital gains are subject to separate taxation at 26% (normal PIT rate applies in certain instances).
Japan: In Japan, gains arising from the sale of real estate property are taxed at a total rate of up to 39.63% (30.63% for national tax purposes and 9% local tax), depending on various factors.
Portugal: 50% of capital gains arising from the sale of real estate by tax residents and non-tax residents in Portugal are taxed at marginal rates varying between 14.50% and 48% (plus the solidarity rate, if applicable).
Singapore: In Singapore, the CGT is not applicable to the sale of residential property.
Spain: In Spain, the CGT rate is 26% for residents and 19% for non-residents.
Thailand: Capital gains on the sale of investments derived from or in Thailand by a foreign company not carrying on business in Thailand are subject to a tax of 15%, withheld at source by the purchaser, unless otherwise exempt under a DTT.
United Kingdom: The rate of CGT is 10%, where the total taxable gains and income is less than £37,700. Any excess gains are taxed at 20%. Where business asset disposal relief applies, the rate of tax on the whole gain is 10%, subject to a £1m lifetime allowance.
United States*: In the U.S., the CGT rate is 0%, 15%, or 20%, depending on their tax-filing status. Individual taxpayers will not pay any CGT if their taxable income is $44,625 or below. If their income falls between $44,626 to $492,300, the CGT rate is 15%. Above $492,300, the rate increases to 20%. A flat tax of 30% is imposed on U.S. source capital gains in the hands of non-resident alien individuals physically present in the United States for 183 days or more during the taxable year.
*How to Defer Capital Gains!
“1031 Exchange” is a type of tax deferral strategy used in the United States for real estate transactions. It allows investors to defer paying capital gains taxes on the sale of a property by "exchanging" it for a similar "like-kind" property. The idea behind this strategy is that investment in real estate can continue to grow tax-free until the final sale, when taxes are ultimately paid.
Real estate can be a valuable investment, providing a place to live and the potential for capital gains. Currently, some of the top markets for real estate capital gains include the United States, Canada, Australia, and the United Kingdom. The global real estate market in each of these countries offers its own unique opportunities and challenges, and a range of factors, including economic growth, interest rates, demographic trends, and government policies, influences it.
At Global Mortgage Group, we understand the complexities that international investors face when it comes to capital gains tax. We provide tailored advice to meet our client's specific needs. Our team of experts is dedicated to providing personalised solutions to help our clients maximize the return on their investments while minimizing their tax liabilities.
Contact us today to learn more about how we can help you get the most out of your capital gains tax and learn all about GMG's financing solutions for foreign national investors at [email protected].