A win-win choice
Investing in real estate abroad can be an advantageous choice in several respects. In addition to the idea that a second home by the sea in a sunny country is a dream for many, choosing to invest abroad can be a smart financial choice. Investors often can benefit from advantageous taxation and very attractive prices in tourist countries with high rental yields.
In France, for example, the capital gain realized on the sale of a second home (excluding exemption) amounts to 36.2% (19% levied on income tax, 17.2% on social security contributions). This tax can be a barrier to buying a holiday home, as can the IFI (French Wealth Property Tax), the increase in property income taxes...
It is therefore interesting to invest in countries with lower capital gains taxes, such as Italy (20%), Spain (19%) or Greece (0%). Purchasers can also turn to countries that offer tax benefits to their new arrivals, such as Portugal or Morocco.
Good places to invest ?
While many French and English people have chosen to invest in Portugal, other countries such as Greece, Italy, Morocco and Mauritius are also very attractive. To begin with, real estate market prices are much lower than in most major European cities such as Paris or London, but this is not their only asset.
In Morocco, the average price per m² in the city is 1400 €. Morocco is particularly generous with retirees who benefit from a 40% tax deduction on their income tax return. In addition, foreign pensioners can benefit from an 80% tax reduction. In Morocco, no wealth tax, inheritance or donation tax but sun, lots of sunshine...
For a property purchase it is necessary to count approximately 1700 € / m² in Italy. Here again, taxation is attractive for some foreign buyers such as the French. For example, they will appreciate the basic tax rate of 0.76% for the IMU (property tax) and its full exemption for the main residence. Its lifestyle, landscapes and beaches are also an undeniable asset.
In Greece, although growth resumed in 2017, the real estate market remains very attractive for a foreign buyer. The average price in the old one is about 1350 € / m². Property tax may not exceed 1% of the value of the property and the tax rate on rental income (calculated by bracket) is set at 15% for an income ceiling of €12,000 per year. In addition, it offers a lower cost of living than in France (-25%), Germany (-30%) or England (-34%) and breathtaking landscapes.
Mauritius, on the other hand, covets foreign buyers. New programs designed especially for them are multiplying and special purchasing schemes have been created so that purchasers can invest in the country and become residents (IHS, PDS, RES...). On the tax side, VAT is 15%, the average income tax rate is 15%, the taxation of rental income is set at 15% and owners benefit from an exemption from wealth tax for property acquired locally. Residents also do not pay property tax, housing tax, capital gains tax or inheritance tax.
