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Europe both most expensive & cheapest region for real estate investors

Europe both most expensive & cheapest region for real estate investors
Global
25 Feb 2016

The T3 (Total Tax Take) research conducted by Taxand, the world’s largest independent organisation of tax advisors, reveals a dichotomy in Europe as it appears as both one of the most expensive but also cheapest region for real estate investors, illustrating the wide tax fluctuations between European countries.  
 
The T3 research analyses the tax take for rental real estate investors across two asset classes: residential rental and commercial rental, across 23 countries around the world. The top five across both asset categories are Greece, South Africa, France, Mexico and Spain for residential rental and South Africa, Mexico, Spain, Colombia and Switzerland for commercial rental. However, at the other end of the scale, Romania, Poland and UK have the lowest tax takes for residential rental, Indonesia, UK and Romania have the lowest rates for commercial rent tax take.

Asset Type Highest Tax Take Average     Lowest Tax Take
Residential rental Greece (30.71%) 16.55% Indonesia (3.15%)
Commercial rental South Africa (19.58%) 14.87% Romania (7.61%)

The findings show South Africa is the second most expensive place for residential rental taxes, with a rate of 24.17%. While the rental demand is high in South Africa allowing landlords to achieve high annual returns, non-resident investors in South Africa have to pay Capital Gains Tax when they later sell their properties.

The research also presented the following key findings: 

  • Greece (30.71%) has the highest tax take for the development and rental of residential units. This is because Greece has material transfer taxes at 3.09%* as well as VAT on acquisition of property;
  • No CIT on a commercial rental sale was crucial for UK to become a second lowest country for T3 in respect to the commercial scenario at a rate of (7.18%); 
  • Romania and Poland’s low income tax rates, mean that they are some of the most attractive locations for residential and commercial development and rent; 
  • The USA, which had previously ranked as the most expensive for commercial rents in terms of tax take, is now firmly in the middle of the pack at place eight with 17.76%. While there is material CIT on sale, other countries’ have over taken the USA with related rental taxes. 

Discover more: Europe both most expensive & cheapest region for real estate investors


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Taxand's Take

Taxand’s T3 research has produced thought-provoking findings around real estate taxation which highlights a number of global trends in rental investment arena. The results demonstrate an increasing widening of tax rates when it comes to rental property. 

Taxand's Take Author

Keith O'Donnell
Taxand Board member & Taxand global real estate tax service line leader
Luxembourg

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