Property Tax for Overseas Property: A Complete Guide

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Property tax is almost universal and one of the oldest forms of taxes. It’s imposed by almost all countries in the world, to persons who own property.

No matter where you’re buying a property, it’s often difficult to escape from property tax.

There are some exceptions, for example Qatar, Saudi Arabia, and a few other Middle Eastern countries.

In addition:

There’s a huge variation in the amount you have to pay in property tax, depending on where you live.

This article explains the details you need to know about property tax in different countries.

property-tax-overseas-foreigners

What is Property tax?

Property tax is collected to cover costs for municipal and other services, for example snow clearing, to build new schools and garbage pick up.

It can also be levied to cover costs to maintain a gym or a swimming pool.

In most cases, the tax amount is calculated based on the assessed value of the property value. Such assessments are usually done by local or municipal Governments.

In some countries, you have to pay property tax to the Federal government, the State government and also the municipal government.

This can be costly for the unaware foreign property buyer.  

Therefore:

It’s important that you learn about the property tax, its rate and other regulations before choosing to buy a property in a foreign country.

Do I need to pay property tax as a non-resident foreign property owner?

Yes, in most cases, as a foreign non-resident property owner, you have to pay property tax.

In fact, in some countries, like in Australia and Spain, foreign owners have to pay higher rates, compared to locals.

Similarly, in some other countries, you have to pay a higher property tax if your property is vacant and not rented out.

As a non-resident foreign property owner, you either have to pay the same property tax as locals, or a higher one.

Do I pay property tax in my country of residence, or overseas?

Often, you can pay the tax online on Government websites, or pay it through your Solicitor overseas, where the property is located.

As municipal or local governments collect property tax in many countries, you have to pay it to that particular local government where the property is located.  

How often do I need to pay property tax?

Usually, the property tax is billed yearly, mostly at the end of the year.

This means, in most countries, you have to pay property tax once a year.

Property tax rates in the Asia Pacific region

Below I’ve listed the property tax rates in different countries in the Asia Pacific region.

Property tax rate in Thailand

In Thailand, you don’t have to pay property tax on real estate unless you use it for commercial purposes.

This means, if you own a house and lives in it, or if the house is vacant, you’re not liable to pay property tax.

But if you own a commercial building or a house that is rented, you have to pay a yearly fee of 12.5%, on the total rental value of the property.

This means, if you’re a foreign investor and want to keep your property vacant, you can avoid property tax in Thailand.

Property tax rate for foreigners in Malaysia

In Malaysia, all residential properties are taxed.

There are two types of property taxes payable on properties, Assessment Tax and Quit Rent. In most cases, you have to pay both on your property.  

Let’s have a look at both:  

Assessment tax on Malaysia property

You need to pay assessment tax to the local or municipal government. It is based on the total annual rental value of the property, assessed by the local/municipal government.

You have to pay a fee of 4% to 6% (based on the state) on the annual rental value of their property, twice a year.

Quit Rent on Malaysia property

This tax Is applied to all properties including farming land and homes. It is based on the total area covered by the property.

The rate is between one to two percent per square foot (based on the size and location of the property).

Property tax rate in Cambodia

In Cambodia, property tax is referred as a Tax on Immovable Property (TOIP).

You have to pay TOIP only if the property worth more than one hundred million Riels (Cambodian currency. This equals to around 25,000 USD.

In such case, you have to pay an annual property tax at a rate of 0.1%. The rate is applied to the property value.

Below is the basic calculation:

You can deduct one hundred million Riels from the total amount, after which 0.1% tax is payable on the remaining amount.

There is another tax on unused land, called TUL. You have to pay TUL if the building or land is vacant.

There is a high annual tax of 2% on the total value of the vacant property .

If you’re buying property in Cambodia, make sure it doesn’t remain vacant for a long period of time.   

Property tax rate in Vietnam

In Vietnam, you don’t have to pay any property tax when owning a property.

But there is another tax on your property, an annual non-agricultural land use tax. You have to pay this tax at the progressive rate of 0.03% to 0.15% of the land price per square meter.

Property tax rate for non-resident foreigners in Australia

You don’t have to pay any property tax if you own a home in Australia.

Recently, some states like NSW also added a new tax called “ghost tax” in an effort to curb the foreign investors who are fueling the housing prices in the country.

You need to pay ghost tax at a flat annual fee of A$ 5,000 if the property is vacant or not rented for more than six months.   

Property tax in Hong Kong

You have to pay 15% yearly property tax in Hong Kong on the annual rental income of the property.

The tax rate is imposed on the yearly rental value minus 20% as expenses (maintenance, repairs). This means the 15% tax is applied on 80% of the total rental value.

There is no tax on properties that are not rented or used to generate income.

Property tax rate for non-resident foreigners in Singapore

Foreigners have to pay a higher property tax in Singapore compared to local residents.

The rates for owner-occupied or vacant properties are progressive and imposed on the annual value which is the expected annual rent your property can earn a year.

If the annual value is $8000 or less, there is no property tax.
If the annual value is $55,000, the rate is 4%.
If the annual value is $70,000, the rate is 6%.
If the annual value is $85,000, the rate is 8%.
If the annual value is $100,000, the rate is 10%.
If the annual value is $115,000, the rate is 12%.
If the annual value is $130,000, the rate is 14%.
If the annual value is more than $130,000, the rate is 16%.

You also have to pay an extra 10% surcharge as a foreigner.

If you don’t occupy the property, the tax rate is higher and ranges from 10% to 20%.

Property tax rate in Japan

Property tax is known as Fixed Asset Tax in Japan.

It is calculated on an assessed value which is approximately 50% to 70% of the construction cost of the building or 70% of the total market value of the land.

If you own a land, you have to pay 1.4% of the assessed value as annual tax.

If you own a house, you also have to pay 1.4% of the assessed value.

You have to pay half the tax amount for the first three years of  newly constructed house if the building is less than 120 square meters.

If it is an apartment house, the duration is 5 years.

In addition, you also have to pay annual city planning tax on your property which is 0.3% of the assessed value.

Property tax rate for non-resident foreigners in the United States

In the US, the property tax is levied by the state or local governments. For example, there is no property tax in most of the city councils and counties in Alaska.

The rates vary from 0% to 4% of the home value. The local authority is responsible to asses the land and building value.

Some of the best states for lower property tax include Hawaii, Alabama, Louisiana, Delaware, District of Columbia, South Carolina, and West Virginia, where property tax is less than 0.6%.

On the other hand, states like New Jersey, Illinois, and New Hampshire has higher rates compared to other states.

Property tax rates for foreigners in Europe

Below I’ve listed different countries in Europe and included the property tax rates.

Property tax rate for non-resident foreigners in United Kingdom

Property tax in the UK is commonly known as Council Tax, which is paid by the resident of the property, not the owner if the owner is not the resident.

You only need to pay the tax if the property is vacant.

This means, if your property is rented, a Council Tax will be paid by tenant.

In the UK, Scotland and Wales, under the Council Tax, all properties are divided into eight bands that range from A to H according to the value of the property. Each band has a different set rate as council tax.

The average tax amount for each band range from 845 pounds for the lowest band to 2,536 pounds for the highest band.

The highest band is for the properties that worth more than 320 thousand pounds.

Property tax rate for non-resident foreigners in Ireland

A local land tax is introduced in the country since 2013. The tax is levied on the residential properties with different rates according to the value of the property.

For example, if the value is up to 1 million Euros, the tax rate is 0.18% on the total value, but for properties that worth more than 1 million Euros, the rate is 0.25%.   

Property tax rate in Spain

In Spain, property ownership tax is called Impuesto Sobre Bienes Inmuebles or IBI. You need to pay this tax to the local government authority.

You can also find a variation in the tax rate based on the local government. The tax rate is usually higher in urban areas compared to rural areas.

Usually, you have to pay 0.3% to 0.5% of the cadastral value of your property as a tax. Cadastral value equals to 70% on the total value of your property.

Property tax rate for non-resident foreigners in Canada

In Canada, municipal governments impose and collect property tax on the real estate within their jurisdiction.

Local Authorities calculate the tax rate based on the assessed value of your property.

The rates also differ based on the city and state.

For example, Vancouver is among the cities with the lowest property tax where you have to pay only $3.68 on average in taxes for every $1000 of assessed home value.

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