Special rules applicable to real property
Domestic and foreign
When a local entity or a non-resident individual or entity sells or transfers real estate property located in Argentina, income tax is triggered.
For resident individuals, if the real estate property that is being transferred has been acquired by the seller before January 1, 2018, no income tax is applicable, and the local individual must pay a special tax on transfer of real estate property.
There is the possibility of a tax deferral on the income tax applicable to the sale of a real estate property using a sale and replacement mechanism.
Foreign residents are generally exempt from Australian CGT except where the relevant asset is a direct or indirect interest in Australian real property (including through an interposed entity).
From May 9, 2012, the 50-percent CGT discount allows for gains made by individuals on Australian real property to be reduced for any periods in which the taxpayer was a foreign resident during the period of ownership. Foreign resident CGT withholding tax (CGT WHT) regime applies in Australia. The CGT WHT rules provide that unless an exemption applies, purchasers of direct or indirect interests in Australian real property are required to withhold 12.5 percent of the purchase price and remit this to the ATO if at least one of the vendors is a foreign resident. The CGT WHT is not a final tax as the vendor may claim a credit for the tax withheld when lodging its tax return for the relevant year.
From December 12, 2019, a law change removed the CGT main residence exemption for foreign tax residents, except in certain limited circumstances.
Real estate transfer tax
In addition to the real estate transfer tax (up to 3.5 percent from the purchase price), the real estate registration duty (1.1 percent) will be levied. In the case of real estate transfers within the closer family circle a tax rate of 2 percent applies, the rate for transfers without compensation is subject to different levels (0.5 percent for a property value of below EUR250,000, 2 percent up to EUR400,000, and 3.5 percent over EUR400,000). For transfers in connection with corporate restructuring under the Reorganisation Tax Act, the tax rate amounts to 0.5 percent of the property value. Specific taxes exist also for some specific industries (eg, banks, insurances, airlines).
In case of direct transfer of at least 95 percent of the shares in an Austrian or foreign company possessing Austrian real estate, a real estate transfer tax of 0.5 percent from the fair market value of the real estate becomes due.
VAT on acquisition and sale of real estate
Sales of real estate are usually VAT exempt, but an option to VAT liability can be exercised under certain circumstances and in this case, 20 percent VAT will be due. An entrepreneurial purchaser can request a refund of VAT (input tax). In the case of changes in VAT treatment, the input tax must also be adjusted pro rata.
Direct acquisition of real estate – Asset Deal
The real estate investor can acquire real estate in Austria by the means of an asset deal (e.g. direct acquisition of real estate) or by means of a share deal (e.g. acquisition of a corporation owning real estate).
In case of an asset deal, the seller transfers all or part of a business to the buyer. The property is transferred directly via purchase contract, inheritance or donation (for example).
Gains are taxed at 25 percent corporation tax for corporations (up to 55 percent for natural persons according to the progression tax rate).
Real estate transfer tax up to 3.5 percent of the purchase price in the case of transfer against payment, but at least of the value of the land plot and registration fee of 1.1 percent of the purchase price (including VAT) will be levied.
Indirect acquisition of real estate – Share Deal
In the case of a share deal, only shares in a company owning real estate are transferred.
Capital gains on the sale of shares in Austrian corporations by private persons/ partnerships/single entrepreneurs in the amount of 27.5 percent and by corporations corporate income tax of 25 percent generally will be levied.
The transfer of company shares is VAT exempt and Real estate transfer tax for the acquired real estate amounts to 0.5 percent of the real estate value at change of shareholders in partnerships or association of shares in partnerships when more than 95 percent are transferred within 5 years to new shareholders or in case of an reorganisations according to UmgrStG will be collected. No registration fee, will be levied as the real estate continues to be the property of the company.
Certain real property fund structures benefit from a favorable tax regime in Belgium.
Brazil provides for a special and optional tax regime for real estate developments.
Generally, any gain realized by a non-resident person on the disposition of Canadian real property may be taxable in Canada.
Properties in Chile are subject to a real estate tax, which shall be paid each year in 4 installments (in April, June, September and November). The amount of the tax to be paid will depend upon the estimated value of the property (avalúo fiscal) determined by the SII (Chilean tax authority). The rates vary depending on the qualification of the soil, type of construction and use of the land, capped at 1.4 percent in case of non-farming real estate and 1 percent for farming real estate, over the fiscal valuation of the property.
Nevertheless, there is a surtax on real estate which values exceed approximately USD530,000.
The lack of payment will entitle the Chilean Treasury to commence judicial actions against the landowner to obtain the payment of the outstanding debt through public auction of the property and the eviction of any person who is occupying it, unless there is a lease agreement executed by public deed and registered in the Mortgage and Liens Registry prior to the judicial actions.
Income from direct or indirect transfers of real property located in China is considered income sourced in China.
Real property is subject to municipal taxation, which depends on the value of the property, the economic use of each property, and the municipal regulations. In general, this tax is levied annually on the ownership, usufruct or possession of real estate property. It is collected by the municipality where the property is located, and the tax rate varies between 0.3 percent and 3.3 percent.
Transfer tax on the acquisition of Finnish real estate is 4 percent on the purchase price payable by the buyer. In case a real estate transaction is carried out by acquiring shares in a real estate company, transfer tax is 2 percent on equity value added with value of debt transferred to the buyer.
A 3-percent tax applies in principle to all entities having immovable properties in France, irrespective of their form and whether they have the legal capacity to act as a legal entity. The 3-percent tax applies to corporations, funds, trusts and other institutions. In practice, this 3-percent tax is not due if the chain of ownership of the real property is duly disclosed to the French tax authorities.
The transfer of ownership of a real estate asset is usually subject to registration duty of 5 percent to 6 percent, which may be reduced under certain conditions to 0.815 percent, including the real estate security contribution of 0.1 percent (eg, asset dealer transactions), or to EUR125 (eg, acquisition of a plot of land with commitment to build on the land).
Specific rules apply to :
- Office sales in the Paris region and
- The sale of building plots or new buildings subject to VAT.
After long political discussions, the new regulations for real property tax have been agreed on. Real property tax is levied by the municipality of real estate where it is located. The new rate applied is the property value multiplied by the real estate tax coefficient (0.34 per thousand for vacant properties) multiplied by the municipality coefficient. However, it is optional for each state to adopt its own real property tax calculation model. This reform should apply as of January 1, 2025; the old law will apply until then.
Real property tax needs to be paid by the owner of the property. It can also be allocated to the tenants as part of the operating costs.
Hong Kong, SAR
Income derived from renting out real properties by owners in Hong Kong is subject to property tax, which is charged at a standard rate of 15 percent of the property's net assessable value for the relevant year of assessment. Depending on individuals’ actual income positions, it may be more beneficial for individuals subject to both profits tax and property tax to elect personal assessment, which allows certain deductions and computation of tax liabilities at progressive rates applicable. A corporation may also seek exemption if the relevant rental income has already been included for profit tax assessment. Save for specific exemptions, ad valorem stamp duty is levied on sale or transfer of real properties in Hong Kong at applicable rates depending on the type of immovable property being transferred.
In addition, residential property transactions in Hong Kong can attract ad valorem stamp duty, Buyer's Stamp Duty and Special Stamp Duty.
The acquisition of real estate in Hungary as part of a purchase, exchange or similar transaction is normally subject to real estate transfer tax, payable at 4 percent of the market value. A reduced rate of 2 percent applies to the value above HUF1 billion (approximately USD2,900,000). Besides real estate transfer tax, there may be other different tax liabilities, including building tax and land tax, which are imposed at the level of municipalities.
Foreign investment in real estate in India is highly regulated. A foreign company may acquire immovable property for business purposes, but amounts received for sale of such immovable property may only be repatriated to the extent paid for such immovable property.
Stamp duty applies to documents which effect certain transactions, including transfers and lease transactions involving real property. The rate of stamp duty varies depending on the transaction (ie, whether the creation of a lease or the transfer of a property interest) and whether the land is residential or non-residential. Stamp duty arises on the transfer of non-residential land at a rate of 7.5 percent. Stamp duty arises on the transfer of residential land at a rate of 1 percent up to the first EUR1 million and 2 percent thereafter.
Irish capital gains tax is chargeable on the disposal of Irish land or buildings irrespective of whether the disposer is an Irish tax resident company or a non-Irish tax resident company.
If the consideration for the sale of Irish land or buildings exceeds EUR500,0001, the purchaser is required to withhold tax of 15 percent of the consideration and remit it to Revenue within 30 working days of closing. This requirement may be avoided where a form CG50A is produced. A form CG50A can be obtained where:
- The vendor is resident in Ireland
- No CGT is payable pursuant to the transfer or
- CGT has already been paid
An annual self-assessed Local Property Tax is charged on the market value of all residential properties.
VAT can arise on the supply of real property.
1 EUR1 million in the case of residential property.
Disposition of real estate assets (or shares in real estate companies) is subject to land betterment tax, which is similar to capital gain ta
Purchase of real estate assets (or shares in real estate companies) is generally subject to a purchase tax at a rate of 6 percent. A purchase of a residential apartment is subject to a purchase tax in a progressive rate of up to 10 percent.
Not applicable for this jurisdiction.
Capital gain on sales of real estate in Japan accruing to a foreign corporation is subject to Japanese corporate tax at regular corporate tax rates. In addition, if a foreign corporation sells shares of a Japanese corporation of which 50 percent or more of its assets are real estate assets, the capital gain on the sale of shares will be included in taxable income subject to regular corporate tax, unless otherwise stated under the applicable tax treaty.
Municipalities impose a land tax of 0.7 percent to 1 percent on the unitary value of real property.
Certain tax opaque Luxembourg investment vehicles owning real estate assets located in Luxembourg may be subject to a 20 percent real estate levy tax (prélèvement immobilier) which applies on derived income such as gross rental income or capital gains realized upon asset or share deal).
There is a state-level property transfer tax (ie, Impuesto sobre Adquiscion de Inmuebles) that could range from 2 percent to 4.5 percent depending where the property is located, and is generally based on the market value of the property. This tax should be paid by the purchaser and cannot be creditable or offset against other taxes.
Income from the sale of real property located in Mozambique is taxed in the country as capital gains.
Corporate taxpayers owning real estate located in the Netherlands that is used for the purpose of their own business can annually depreciate the cost price of the real estate to its residual value, but not more than when the tax book value has reached 100 percent of its estimated market value (WOZ value). The estimated market value is assessed annually by the municipality where the real estate is located. The 100-percent threshold also applies to Dutch real estate that is rented out to 3rd parties.
Municipal authorities levy real estate tax on the ownership of real estate. Real estate tax applies to the assessed real market value of the real estate at rates ranging between 0.1 percent and 0.5 percent. Some municipalities do not levy real estate tax.
Not applicable for this jurisdiction.
In 2018, an income tax that is payable on certain commercial properties (fixed assets) was introduced. The tax applies to office buildings, shopping centers, department stores and other retail and service buildings with an initial value of more than PLN10 million. The tax is payable on a monthly basis; the rate is 0.035 percent of property value if it exceeds the sum of PLN10 million, determined at the first day of each month. The tax so calculated will reduce the "standard" corporate income tax, and any surplus over the standard corporate income tax may be refunded to the taxpayer upon its application and after tax authorities verify the correctness of the taxpayer's tax calculation.
Not applicable for this jurisdiction.
Gains derived by a foreign entity from transfer of a real estate located in Romania or from the disposition of any rights related to such real estate are subject to the standard corporate income tax rate. Tax treaties can reduce or eliminate these taxes.
Income from the sale of real property located in Russia is considered income sourced in Russia.
Not applicable for this jurisdiction.
In 2013, South Africa introduced a special regime for real estate investment trusts (REITs). This new regime, currently only applicable to listed REITs, offers certain tax advantages to qualifying entities and provides certainty on the tax treatment of property loan stock companies, which previously did not exist in South Africa.
A land transaction is not subject to VAT (value added tax). Property tax varies on the type of real property.
Not applicable for this jurisdiction.
Stamp duty may be triggered on the sale of real estate. If the buyer is a legal person, the tax rate is 4.25 percent of the basis. The basis for the tax is the higher of the purchase price and the tax assessment value of the real estate. The buyer and the seller are equally liable to pay the tax, but contractually, that liability is normally the buyer’s.
Capital gain on Swiss immovable property is subject to a special cantonal real estate gains tax or to ordinary corporate income tax, depending on the system that is applied in the canton where the immovable property is located.
Moreover, about half of cantons levy a special wealth tax on real estate. This tax is due every year in addition to the general wealth tax. The tax is levied at the place where the property is situated and is assessed on the market or taxable value of the real estate without allowing for the deduction of debts. The applicable tax rates are between 0.02 and 0.30 percent.
Effective from July 1, 2021, income tax rate on sale of real property is set as follows:
- 45 percent of gains on the sale within 2 years of purchase
- 35 percent of gains on the sale within 2 to 5 years of purchase
- 20 percent of gains on the sale within 5 to 10 years of purchase
- 15 percent of gains on the sale after 10 years of purchase
For foreign nationals and companies, the tax rate is 45 percent on any property held for less than 2 years and 35 percent for any property held for more than 2 years.
For sale of self-use property by an individual whose household has been registered in that property for 6 years or longer, the first NT4million gains will be exempt from the tax, and the excess amount of gains will be taxed at 10 percent.
The same tax rate is imposed on individuals and businesses and applies retroactively to real properties acquired by the sellers after 2016.
According to the Business Mergers and Acquisitions Act, stamp duty, deed tax, VAT and the land value increment tax are exempt under certain M&A transactions if they involve the sale and purchase of real property.
The real property tax is calculated based on the relevant real property's value at different rates (eg, 0.1 percent for lands and 0.2 percent for buildings). Square meter rates are determined based on location and are increased in large cities.
Residents and nonresidents pay property tax on real property they own and on leased land. Reporting and payment of property tax is separate for land and real estate.
Property tax on land is set by local authorities depending on the type of land and its monetary evaluation. Tax on leased land is paid in the form of rent.
Property tax on real estate is established by local authorities as a fixed rate per 1 square meter of real estate.
United Arab Emirates
Not applicable for this jurisdiction.
An additional annual tax charge (the annual tax on enveloped dwellings or ATED) is made on companies which own or control residential property of more than GBP500,000 in value. Various exemptions apply to companies which develop, lease or trade property or use the property for other business purposes, which should have the effect of restricting the charge to companies which are used simply to own the private homes of high net worth individuals. The amount of the charge varies from GBP3,700 to GBP237,400 according to the value band into which the property falls.
Under the Foreign Investment in Real Property Act (FIRPTA), any gain recognized by a foreign person on a disposition of stock of a domestic corporation that is treated as a US Real Property Holding Corporation may be taxable as effectively connected income, taxable on a net income basis at regular US income tax rates.
Receipts and accruals of a licensed investor from the sale of a property forming the whole or part of the investment to which their investment license relates are exempt from payment of Capital Gains Tax. A licensed investor is a foreign investor who has obtained a license from the Zimbabwe Investment and Development Agency to invest in Zimbabwe.