Before buying a property abroad, it is best to know the rules governing the real estate market in the host country. We will develop our point of view with the example of three countries located in the Indian Ocean.
Owning a home in a paradise destination tempts you? Before you embark on this new adventure, you must first define your motivations. Do you want to buy a property for your retirement? Make a rental investment? Or benefit from a more favorable tax treaty? Whatever your goal, be clear with yourself. Since tax rules change from one country to another and can have a significant impact on the health of your finances in this gloomy economic climate, you must thoroughly examine the advantages and disadvantages of investing abroad
How to acquire good property?
Know that each country is different. “In Mauritius, for example, a foreigner can not acquire real estate outside the IRS (Integrated Resort Scheme or RES and Real Estate Scheme, IHS or PDS) program. The IRS programs consist of a luxury apartment or villa accommodation, the price of which varies around 500,000 Euros. Another specificity, Thailand requires that foreigners do not represent more than 49% of the owners of a condominium (a kind of joint ownership). This system can cause serious resale problems when the foreign ownership rate of 49% has already been reached. Promoters or you will have no choice but to find a Thai buyer. In the same country, foreigners can not acquire land but can benefit from a 30-year lease.
How is the tax treat?
Do not be seduced by the landscape think about resale before signing. Your goals: Know how your potential capital gains will be taxed. “In Mauritius, the tax is 15%. In Indonesia, they will be taxed at progressive rates ranging from 0 to 37%. Finally, some countries like Thailand do not impose capital gains. ”
How are the income from the property taxed?
Investors should be well informed about the taxation of property income. “In Mauritius, the tax rate is 15%. But in Indonesia, for example, this income is not taxed. Finally, in Thailand, taxation withheld at source of 15% if the income is paid abroad, but they are not taxed when they stay in the country. “You have to take into account so many aspects and situations before buying a property abroad.