Affording a luxury property is only for a few but knowing where there is less to be paid in taxes will be of advantage and some money saved could be put to other use.
The United States, Russia, Slovakia and Estonia are at the bottom of the list of countries who either charge very low to 0% stamp duties on luxury properties priced at no less than US$3.5 million, according to a study done by UHY tax professionals.
UHY studied tax and compulsory property registration charges in 25 countries across its international network, including all members of the G7, as well as key emerging economies.
UHY calculated the total taxes and compulsory fees payable to local, state and municipal government on property purchases of up to US$3.5million
The U.S. charges 0.80% or roughly US$28,000 on properties worth $3.5 million. Estonia charges 0.09% or US$3,317, while Russia and Slovakia charges no taxes at all.
The countries listed by UHY with the highest stamp duties include India with 8.02%, the United Kingdom and Spain with 7%; Australia with 5.30%; Argentina with 5.10%; France, 5.09%; China and Germany, 5%; Austria, 4.60%; and Israel at 4.38%.
Russia charges a nominal fee for the registration of new property purchases. The The total taxes and fees for Austria include a 1.1% land register fee. While, Slovakia abolished real estate transfer taxes in 2005.
State governments all over the world have attempted to plug fiscal deficits with stamp duty in recent times it is not without problems, UHY Haines Norton Indirect Tax Specialist Partner, Dario Nazzari explains.
“Stamp duty is an additional barrier to entry into the housing market and, as house prices soared, so did the additional stamp duty which needed to be paid at the time of purchase. This is somewhat of a paradox as it made it harder to enter the market and, as a consequence, cooled the housing market even further as activity slowed,” Mr. Nazzari adds.
He notes that the high level of taxes on property purchases in countries make it an unattractive option for overseas investors as it adds more costs to any acquisition.