Sterling Heights, Michigan (PRWEB) July 25, 2016
The US levies one of the lowest property purchase taxes in the world on prime real estate, charging on average 0.6 percent, or $6,000, in tax on a property purchase of $1 million, reveals a new study by UHY, a leading international accounting and consultancy network.
This is far lower than the global average of 3.3 percent ($33,038) for properties worth $1 million.
UHY says that by keeping taxes in this price bracket low, governments can encourage labor market mobility of senior executives and valuable overseas investment from High Net Worth individuals, although they also risk losing out on an attractive source of revenue.
UHY notes that property purchase taxes can vary between all 50 states and 0.6 percent represents an average of those states that do impose such taxes.
UHY says that major European economies including France, Germany, and Spain levy among the highest property purchase taxes in the world (see table below).
UHY’s findings show that Belgium has the highest average property taxes for real estate worth $1 million of any country in the study at 11.3 percent* - a charge of $113,131. Other western European economies at the top of the table include France and Germany, charging $50,901 and $50,000 respectively.
New Zealand and Russia have the lowest taxes in the table, effectively charging zero percent on prime property purchases.
New Zealand has no central or local government transaction taxes on real estate and residential property deals between home owners, as they are exempt from the government’s Goods and Services tax. Similarly Russia imposes no transfer taxes on the buyer, who only pays a minor fixed amount of State Duty of around $30.
UHY says that while the G7 economies charge on average three percent ($29,720) - broadly in line with the global average - tax charges in the BRIC economies are around a third lower at 2.3 percent ($22,720).
UHY tax professionals studied tax data for individuals purchasing a house worth $1 million in 26 countries across its international network, including all members of the G7, as well as key emerging economies.
Comments Dennis Petri of UHY Advisors, a member of UHY: “Many economies risk over-exploiting property purchase taxes as a way to bolster finances, so it’s encouraging to see the US exercising restraint.”
“Higher property purchase taxes can put a strain on domestic buyers, who may not actually be particularly wealthy, given house price inflation in some locations over the last decade or two.”
“The United States has one of the lowest tax rates in our study. The low level of tax enables home owners to move more freely from city to city and now, the US is seen as having enviable labor market mobility.”
“Levying significant taxes on the cost of a new property can also constrain labor market mobility. If businesses have to offer much greater incentives for senior executives to relocate, this could have a serious impact on job creation and business investment, and ultimately on the wider economy.”
Dennis Petri adds “Prime properties, especially in capital cities, are particularly desirable for wealthy investors from overseas, but where there are excessively high taxes, these markets could become less attractive. Capitals such as Paris or Berlin, could lose out to locations such as Washington where purchase taxes are seen as more reasonable.”
“These wealthy overseas investors contribute to the local economy in many other ways, through discretionary spending while they are staying in the property, as well as maintenance costs, for instance by refurbishing extensively, or employing staff.”
Click the link below to view the full results.
# # #
About UHY LLP
UHY LLP, a licensed CPA firm, provides audit and other attest services to publicly traded, privately owned and nonprofit organizations in a number of industry sectors. UHY Advisors provides tax and advisory services to entrepreneurial and other organizations, principally those enterprises in the dynamic middle market.
UHY LLP, operating in an alternative practice structure with UHY Advisors, forms one of the largest professional services firms in the US. While that scale might provide confidence for some clients, others tell us our greatest value is the way we bring these resources to bear to help address today’s evolving business challenges. It’s a philosophy we call “The Next Level of Service”. To learn more visit http://www.uhy-us.com.
All of the above entities are members of UHY International (“UHYI”), a worldwide network of independent professional services firms that provide audit, tax and advisory services around the globe. UHYI is ranked among the top international accountancy networks and a proud member in good standing of the Forum of Firms. Collectively, our US operating entities (UHY LLP and UHY Advisors) are the largest independent members of UHYI with significant participation, bringing the power of our international network to serve the individualized needs of our clients.
About UHY, the network
Established in 1986 and based in London, UK, UHY is a network of independent audit, accounting, tax and consulting firms with offices in over 296 major business centres across more than 89 countries. Our staff members, over 7,660 strong, are proud to be part of the 16th largest international accounting and consultancy network. Each member of UHY is a legally separate and independent firm. For further information on UHY please go to http://www.uhy.com.
UHY press contact: Dominique Maeremans on +44 20 7767 2621 Email: d.maeremans(at)uhy(dot)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 http://www.forumoffirms.org.
UHY is an international association of independent accounting and consultancy firms, whose organizing body is Urbach Hacker Young International Limited, a UK company. Each member of UHY is a separate and independent firm. Services to clients are provided by the UHY member firms and not by Urbach Hacker Young International Limited. Neither Urbach Hacker Young International Limited nor any member of UHY has any liability for services provided by other members.