As global mobility increases, it is becoming common for high net wealth families to own homes in a number of countries, and to invest in commercial and other real estate outside of their country. Often this can be driven by their children who have chosen to undertake their university studies abroad, or alternatively, the desire to retire to another country once their businesses have been sold.
As a result of this, Governments around the world are closely examining investment in real estate by foreigners, with many countries restricting ownership to newly built houses in an attempt to drive their country’s construction industry. An emerging trend across a number of jurisdictions is the perception that foreigners are driving up domestic residential house prices, resulting in governments restricting domestic banks from loaning funds to foreigners for home purchases and also the introduction of a ‘vacancy levy’ or ‘empty homes tax’ to encourage property owners to either live in their property or make it available for rent, thus adding to the supply of housing availability and affordability. What is also apparent is that many countries have been lax in their recording foreign ownership of property, with some moving towards a register of beneficial ownership to bring some transparency to the degree of ownership by people living abroad.
This, combined with the introduction of the Common Reporting Standard (CRS) and Foreign Account Tax Compliance (FATCA), has greatly increased the level of transparency of families with real estate and bank accounts in many countries worldwide. The CRS will improve tax transparency, with financial institutions releasing information each year to the tax authorities in their country, who then share this information with tax authorities in other countries. At this stage, over 124 countries have committed to the CRS, including most of the ‘tax haven’ countries like the British Virgin Islands (BVI), Guernsey, and Jersey. In this publication, we detail the legal and tax rules for foreigners buying real estate in the Asia Pacific region as well as popular countries such as Canada, the USA and the UK.
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Mark Pollock - Leader of Global Private Client Strategy Group, Asia-Pacific
BDO in Australia
Paul Areays - Chair of Global Private Client Strategy Group and leader of European Strategy group
BDO in United Kingdom