Launched by Knight Frank Asia Pacific, the independent global property consultancy, the Asia-Pacific Residential Review for January 2015 provides a comprehensive coverage of the major taxes incurred for residential property, and analyses the costs of your residential investment in Asia-Pacific.
Looking beyond the potential total returns of a property investment, it would be wise for investors to understand and take into account the potential liabilities such as tax on acquisition, holding or exit, in order to obtain a clearer picture on the true potential returns. With taxes one of the key tools at the disposal of the policy makers to cool residential markets, balance the books and address the issues of affordability and household debt, investors should always be mindful of the possible tax burden for any overseas property investment.
Countries that were looked at includes Australia, Cambodia, Hong Kong, Japan, Malaysia, Singapore, South Korea and Thailand in this report the uses a hypothetical residential investment scenario, the tax liabilities borne by cross-border investors in the region, with the focus on eight markets in Asia-Pacific that allows foreigners to invest more liberally, without residence requirements in particular.
The two countries that had the highest tax burdens on residential property investments in the region were unsurprisingly, Singapore and Hong Kong, with Cambodia at the other end of the spectrum. Another key finding was that the foreign investors in both Singapore and Hong Kong had a significantly heavier tax burden compared to their local counterparts.
The disparity between tax burden on foreign and local investors is explained by:
- Australia: A higher income tax* imposed on foreigners
- Hong Kong: A cooling measure of 15% Buyer’s Stamp Duty on foreigners
- Malaysia: A combination of higher income tax* and cooling measure of higher Real Property Gains Tax imposed on foreigners
- Singapore: A combination of higher income tax* and cooling measure of 15% Additional Buyer’s Stamp Duty imposed on foreigners
Japan is the only country that bills locals more, as its local inhabitant tax is only levied on residents.
Apart from tax, there is another “investment premium” that is the additional tax that an investor pays as compared to a property bought for self-use, with the premium varying between foreign and local buyers. However, markets such as Cambodia, Japan, Malaysia and South Korea do not impose an investment premium on either local or foreign buyers.
For a more in-depth look at the major taxes and figures for individual homebuyers between the various markets across Asia-Pacific, please download the full report from http://bit.ly/Resi15