Real estate investors often focus on location, price, and potential returns, but tax implications can make or break your global investment strategy. Property taxes, rental income obligations, capital gains, and inheritance rules differ wildly across jurisdictions.

This article unpacks the critical tax frameworks that apply to real estate in leading markets, helping you make informed, profitable, and compliant investments worldwide.

Why Taxes Matter in Real Estate

Every stage of a real estate transaction has tax consequences:

• At Purchase: Transfer taxes, stamp duties, and VAT

• During Ownership: Annual property taxes and rental income tax

• At Sale: Capital gains taxes

• At Death: Inheritance or estate taxes

Understanding these in advance protects your profit margins and legal standing.

1. Capital Gains Tax (CGT)

What it is: A Tax on the profit made from selling property.

Global Variations:

• Portugal: 28% for non-residents (possible exemptions if reinvesting)

• Spain: Up to 26% depending on gain size

• UAE: No capital gains tax

• Thailand: Withholding tax (around 3–5%), treated as CGT

• USA: 15% or 20% federal CGT + state taxes (e.g., California adds up to 13.3%)

• Greece: 15% CGT, though currently suspended for many cases

Tip: Holding property longer (5–10 years) often results in reduced rates or exemptions.

2. Rental Income Tax

What it is: A Tax on income earned from letting property.

Sample Rates (for non-residents):

• Portugal: 28%, may be reduced through deductions

• Spain: 24% flat for non-EU; 19% for EU residents with allowable deductions

• Thailand: Personal income tax rates apply, up to 35%

• Türkiye: 15%–35 % progressive scale after deductions

• UAE: No income tax on rentals

• USA: Subject to federal and sometimes state income tax; 30% default withholding for non-residents unless treated as ECI (Effectively Connected Income)

Tip: Check local treaties to avoid double taxation.

3. Annual Property Taxes

What it is: A Tax levied yearly by municipalities or the national government.

Examples:

• Portugal: IMI tax varies 0.3%–0.8% of the value

• Spain: IBI tax ranges from 0.4% to 1.1%

• UAE: Service charges instead of property tax (varies by project)

• Thailand: Land and building tax based on use and value

• USA: Annual property tax between 0.5% and 2.5%, depending on the state

Tip: Luxury or secondary homes often face surcharges.

4. Inheritance & Estate Taxes

Why it matters: Your heirs may face significant costs if you don’t plan.

Sample Scenarios:

• USA: 40% federal estate tax (above $13.61M threshold for 2024; lower for non-residents)

• France: Up to 60% for non-family heirs

• Portugal: No inheritance tax, only 10% stamp duty

• Spain: Inheritance tax varies by region and relationship

• UAE: No inheritance tax, but Sharia law may apply for Muslims

Tip: Use trusts, life insurance, or holding companies to plan succession.

5. Value Added Tax (VAT) or Stamp Duty at Purchase

• Portugal: Transfer tax (IMT) up to 8%

• Spain: Transfer tax 6%–10% or VAT 10% on new builds

• Thailand: 6.3% total for various duties and taxes

• UAE: 4% transfer fee in Dubai

• USA: No federal stamp duty, but many states impose transfer taxes

Tax Planning Tips for Global Investors

1. Check Double Taxation Agreements (DTAs): Prevent being taxed twice on the same income.

2. Consider Residency: Some countries tax global income based on residency status.

3. Use Corporate Structures: Legal entities may lower taxes and improve asset protection.

4. Track Expenses: Renovations, furnishings, and maintenance can often be deducted.

5. Consult Experts: Always work with international tax advisors and local attorneys.

High-Tax vs. Low-Tax Real Estate Markets

Common Tax Mistakes to Avoid

• Underreporting rental income

• Assuming your home country's rules apply abroad

• Ignoring local filing deadlines

• Improperly classifying short-term vs. long-term rentals.

• Overlooking estate tax exposure for heirs

Final Thoughts

Real estate tax planning is as essential as choosing the right property. It affects your ROI, compliance status, and legacy. With sound advice and strategic planning, you can invest globally while minimising risk and maximising returns.

Don’t let tax surprises eat into your real estate success. Learn the rules, and build your global portfolio with eyes wide open.