Tag Archives: european
Sau Paulo has the highest property taxes for real estate investors
As the rate of price growth slows in many global city markets, transaction costs and taxation are becoming increasingly important considerations for investors, a new analysis suggests. With slower price growth forecast in a number of prime city markets, investors are looking more closely at the cost side of the investment equation, according to the report from international real estate firm Knight Frank. While there may be a number of factors behind the choice of location, the research shows that the tax burden across the cities in this report varies considerably both in amount and extent. The tax costs range from as low as 3.5% or 3.6% of the property price in year five in Monaco and Dubai respectively, to over 30% in Sao Paulo. Despite encompassing a wide variety of cities and policies, a number of common themes and trends have arisen throughout the research. For example, in some cities, most notably in Geneva and in Mumbai, there are significant legal restrictions for non-residents who wish to purchase property so it is important to consider these before an investment decision is made. In some jurisdictions, the tax costs are represented primarily by acquisition taxes, notably in Monaco and Dubai, while in most other jurisdictions, tax costs usually comprise acquisition duties payable when purchasing the property; wealth or yearly taxes when holding the property; taxes on rental income, and taxes on disposal of the property, including tax on gains and/or duties at the point of the sale of the property. While in some countries the relative/percentage tax costs are almost equal for both US$1 million and US$10 million properties, in others the tax costs of holding the US$10 million property are almost double those for US$1 million property, the report points out. ‘Finally, it is important to note that some taxes, such as inheritance/gift taxes have not been taken into account in this analysis. Nor were home country taxes. Moreover, we have assumed that investors purchase in their personal name but that might not necessarily be the most efficient from a host or investment country’s tax perspective,’ the report says. However, overall property costs remain largely the same for both a $1 million and $10 million property in many cities such as Sao Paulo, Mumbai and Geneva whilst others see a significant reduction in percentage terms at the $10 million level such as New York and Paris. Reviewing the tax costs across the 15 main cities shows that taxation is highest in Sao Paulo, at both the US$1 million and US$10 million levels, where investors are taxed at 31.5% of the sale value at year five. Hong Kong and Sydney also rank highly. An investor purchasing a US$1 million property in Hong Kong is taxed 22.4%, whilst at the US$10 million level investors in Sydney are taxed 26.0%, in both cases as a percentage of year five price. Monaco offers non-resident investors the lowest rate of tax at 3.5% as a percentage of… Continue reading
Prime central London property market unlikely to see growth until Q3 next year
Potential sellers in central London’s prime property market are staying put and using the money they would have paid in stamp duty on refurbishing their present home, it is suggested. Official statistics show that price growth in this sector of the UK’s property market has slowed with changes to stamp duty announced a year ago blamed. The latest analysis report from Sandfords, a central and North West London agent, confirms that this has been the case. ‘The stamp duty changes that took place towards the end of 2014 have depressed the market across the board in prime central London and forecasts for next year have altered in light of this,’ said Andrew Ellina, the firm’s director. ‘I predict that price increases in the prime central London market in 2016 will be modest with some areas experiencing growth and others seeing prices remaining fairly static,’ he added. He explained that families in particular are choosing to carry out alterations rather than put their home on the market and the firm expects this to continue into the New Year. The biggest price band that has been affected is from £1.5 million to £5 million. For properties below the £1.5 million the stamp duty changes have not been too onerous. For anything above £5 million, purchasers have sufficient funds and are therefore not too bothered about a heavy stamp duty bill. Ellina believes that unless something significant happens that we cannot foresee at the moment, there will not be a crash, but the global economic outlook combined with tax changes in the UK and the perceived high current values will subdue demand and this will take some time to work through. ‘I do not anticipate sustainable growth returning until the third quarter of 2016,’ he said. Regent's Park and Marylebone are still undervalued in comparison to Knightsbridge and Kensington, but are becoming increasingly more fashionable and desirable, the report suggests. Other areas of growth will be in Fitzrovia and Kings Cross which are rapidly changing out of all recognition. ‘The capital is undoubtedly still one of the safest places in the world to live and invest, and will continue to be a top investment location. This year, buyers from all over the world including, the Far East, China, India, Greece and Europe have been heavily spending their money and buying properties in London, and it looks like they will still be big players in 2016,’ Ellina concluded. Continue reading
Scottish residential rent rises have halved in four months
The Scottish residential rental market as seen rents rising at half the speed they were during the summer months, slowing from a 3.1% annual rise in June to 1.6% October. After peaking at record prices in the summer, Scottish rents have been falling in recent months but there are signs that growth is starting to rally again, according to the latest buy to let index from lettings agent network Your Move. They increased by a modest 0.2% between September and October, the first month on month rise since July, and takes the average monthly rent in Scotland to £546, just £1 higher than the previous month in cash terms. Despite widespread recognition that tenant demand is currently outpacing supply of available homes to let, landlords believe that rent rises are likely to continue on a slower trajectory than witnessed earlier this year. Indeed, according to the latest Landlord Survey from Your Move, landlords expect rents to increase by just 1.4% over the next 12 months. Only 32% of landlords are intending to raise their rents next year, with the main motivation being to cover the cost of inflation. ‘There are indications from landlords that this trend will continue until 2016. Ultimately, rents in the private rented sector reflect what people are willing and able to pay, and are delimited by household incomes and monthly earnings,’ said Brian Moran, lettings director at Your Move Scotland. A breakdown of the figures shows that rents are higher year on year in every region of Scotland except Glasgow and Clyde in October. Scotland’s second city has seen a 0.9% drop in rents since October 2014. This means the typical rent in the area now stands at £560, down from a record of £575 in the summer of 2014. Compared to a year ago, the Highlands and Islands has experienced the biggest increase in rents, up 5.7% in 12 months. However this rate of growth is starting to slow after a monthly price drop in October, and rents have come down from their historic peak in September. After this, average rents in the South of Scotland are up 2.6% year on year. Annual rent growth in Edinburgh and the Lothians has increased from 2% in September to 2.5% in October, meaning that rents are now £15 more expensive than a year ago in Scotland’s capital city. Standing at £630 per month, this is a new record for rent prices in the region, and 15% higher than the average rent in Scotland overall. The East of Scotland has experienced a more modest 1% uptick in rent prices in the past 12 months, with monthly rents rising by £5 to £522. Three of the five regions of Scotland have seen rents increase in the past month. The urban centres of Edinburgh and the Lothians and Glasgow and Clyde have seen the strongest month… Continue reading
