· Spain and UK top tables for highest
purchase taxes for prime properties
Governments
are targeting wealthy property buyers with higher property purchase fees in an
attempt to help plug their fiscal deficits, shows research by UHY
International.
The
average cost of stamp duty and other compulsory property purchase fees for a
property worth USD3.5 million is now 3.4%, compared to the average 2.6% tax
burden on more modest properties with a purchase price of USD150, 000.
This
has been pushed up by recent purchase tax increases on high end properties in
countries such as the UK and Spain.
Spain
and the UK have some of the highest property purchase taxes targeted at prime
properties, which are seen as attracting a large proportion of overseas buyers.
The
UK levies 7% stamp duty on property purchase over USD3.1 million, while Spain’s
average taxes and charges of 7% mask a shift towards higher marginal rates for
the most expensive properties.
In regions popular with wealthy local and
foreign buyers, including the coastal provinces of Andalucía, Cantabria and
Asturias, and the Balearic Islands, rates vary from 8% to 10% for more substantial
properties.
Earlier
this year Hong Kong doubled the rate of stamp duty charged on properties of
over HK$2million to 8.5%. In mainland
China, the most expensive properties attract stamp duties and other taxes of 5%
of the property’s value, compared to 3% for lower value properties.
Ladislav Hornan, chairman of
UHY explains: “In the wake of the financial crisis, national and regional
governments have been desperate to plug their deficits.
One populist way to do this
has been by levying new top rates of stamp duty on the purchase of the most
expensive properties, which often attract foreign buyers.
When the new top rate was
announced in the UK, it was in part a response to left-of-centre politicians’
demands for a so-called mansion tax.”
“While some markets might be
sufficiently robust to absorb this, governments do need to be careful not to
kill off their property market altogether. Economies benefit from the added
value that wealthy buyers and an active property market bring to the economy, from
spending on refurbishments, to legal fees and employing domestic staff. Once High- Net- Worth individuals leave, it
is hard to attract them back.”
Ireland, despite
moving to a flatter stamp duty structure in the wake of the financial crisis,
still charges double the rate of stamp duty on the proportion of a property
sale exceeding Euro€1,000,000.
UHY
also point out that many European economies that do not target prime properties
in particular still have relatively high overall property purchase taxes, averaging
nearly 4.5% for France, Italy, Austria, the Czech Republic and Germany.
UHY
say that by increasing the costs of buying a new home, these higher property
purchase taxes discourage labour market mobility. By contrast in North America, property
purchase taxes are far lower, typically below 1% in the USA and no higher than
1.9% for the most expensive homes in Canada.
Ladislav
Hornan adds: “By imposing often very significant additional costs on the
purchase of a property, governments may be discouraging people from moving for
a new job, especially those with families who might reasonably expect to own
their own property.”
“That
means that employers have to offer significant pay rises to lure talented staff
to a new location, workers opt to do jobs that are below their skills and
experience rather than move. High levels
of stamp duty are an easy fiscal option, but in a prolonged recession, they may
be a short-sighted one.”
Bernard
Fay, co-managing partner of UHY Fay & Co, the Spanish member firm of UHY, says:
“Since 2010, regional governments in Spain have made much greater use of their
discretion to set their own stamp duty rates, with the result that rates have
gradually shifted upwards, especially in areas popular with high net worth
individuals and international buyers.”
“Combined
with other tax requirements, targeted at wealthy international families, it is
starting to make Spain look unwelcoming towards exactly the sort of people who
have sustained the economy of many coastal regions of Spain for the last few
decades.”
UHY tax professionals
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
USD150,000 and USD3.5million.
|
|
For a
property of USD3,500,000
|
|
For a
property of USD150,000
|
||
|
|
Amount of
tax and charges paid
|
% of
property price
|
|
Amount of
tax and charges paid
|
% of
property price
|
|
India
|
$
280,830.00
|
8.0%
|
India
|
$ 12,830.00
|
8.6%
|
|
Spain
|
$ 245,000.00
|
7.0%
|
Spain
|
$ 10,500.00
|
7.0%
|
|
UK
|
$ 245,000.00
|
7.0%
|
Argentina
|
$ 7,650.00
|
5.1%
|
|
Australia
|
$ 185,830.00
|
5.3%
|
France
|
$ 7,640.00
|
5.1%
|
|
Argentina
|
$ 178,500.00
|
5.1%
|
Germany
|
$ 7,500.00
|
5.0%
|
|
France
|
$ 178,150.00
|
5.0%
|
Austria
|
$ 6,900.00
|
4.6%
|
|
Germany
|
$ 175,000.00
|
5.0%
|
Czech
Republic
|
$ 6,050.00
|
4.0%
|
|
China
|
$ 165,030.00
|
5.0%
|
Mexico
|
$ 5,410.00
|
3.6%
|
|
Austria
|
$ 161,000.00
|
4.6%
|
China
|
$ 4,580.00
|
3.0%
|
|
Israel
|
$ 153,340.00
|
4.4%
|
Italy
|
$ 4,940.00
|
3.0%
|
|
Czech
Republic
|
$ 140,050.00
|
4.0%
|
Romania
|
$ 3,820.00
|
2.5%
|
|
Japan
|
$ 113,930.00
|
3.3%
|
Australia
|
$ 3,660.00
|
2.4%
|
|
Italy
|
$ 105,440.00
|
3.0%
|
Malaysia
|
$ 3,000.00
|
2.0%
|
|
Malaysia
|
$ 105,000.00
|
3.0%
|
Netherlands
|
$ 3,000.00
|
2.0%
|
|
Mexico
|
$ 83,220.00
|
2.4%
|
UAE
|
$ 3,000.00
|
2.0%
|
|
Netherlands
|
$ 70,000.00
|
2.0%
|
Uruguay
|
$ 3,000.00
|
2.0%
|
|
UAE
|
$ 70,000.00
|
2.0%
|
Japan
|
$ 1,810.00
|
1.2%
|
|
Uruguay
|
$ 70,000.00
|
2.0%
|
Ireland
|
$ 1,500.00
|
1.0%
|
|
Canada
|
$ 66,160.00
|
1.9%
|
Canada
|
$ 1,230.00
|
1.0%
|
|
Ireland
|
$ 57,020.00
|
1.6%
|
USA
|
$ 1,110.00
|
0.7%
|
|
Romania
|
$ 55,680.00
|
1.6%
|
Estonia
|
$ 170.00
|
0.1%
|
|
USA
|
$ 28,000.00
|
0.8%
|
UK
|
$ -
|
0.0%
|
|
Estonia
|
$ 3,320.00
|
1.0%
|
Israel
|
$ -
|
0.0%
|
|
Russia
|
$ -
|
0.0%
|
Russia
|
$ -
|
0.0%
|
|
Slovakia**
|
$ -
|
0.0%
|
Slovakia**
|
$ -
|
0.0%
|
Notes to table
The calculations assume that both buyers and
sellers are private individuals from the country concerned. Special exemptions, e.g. for new properties,
are not taken into account.
Figures for Australia, Canada, Germany, India, Mexico,
Spain and USA are national averages. State
and municipal taxes and charges vary.
Russia charges a nominal fee for the registration
of new property purchases. The UAE
charges a compulsory 2% of the property price to register a property
transaction at the local land department.
The total taxes and fees for Austria include a 1.1% land register fee.
**Slovakia abolished real estate transfer taxes
in 2005.
About UHY
Established in
1986 and based in London, UK, UHY is a network of independent accounting and
consulting firms with offices in over 270 major business centres in 86
countries.
Over 7,100
staff generated an aggregate income of USD622 million in 2012, ranking UHY the
25th largest international audit, accounting, tax and consultancy network (by revenue).
Each member of
UHY is a legally separate and independent firm.
For further information on UHY please go to www.uhy.com. UHY is a
full member of the Forum of Firms, an association of international networks of
accounting firms. For additional information on the Forum of Firms, visit www.forumoffirms.org
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