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6 Hidden Tax Problems of Owning a Home Abroad · IMI Podcasts

• 0:00
  SPEAKER_00: Looking at a potential home abroad?
• 0:02
  SPEAKER_00: Whatever the price, it's a lie.
• 0:04
  SPEAKER_00: The number on the closing statement is just the beginning.
• 0:07
  SPEAKER_00: Owning it can tax you every year you hold it, again when you sell, and once more after you die.
• 0:13
  SPEAKER_00: In this video, IMI has mapped the six hidden taxes most residence buyers miss before buying another residence overseas.
• 0:21
  SPEAKER_00: Most investors focus on a single number when they purchase property abroad.
• 0:25
  SPEAKER_00: The price.
• 0:26
  SPEAKER_00: The tax exposures attached to the title never show up on the closing statement, and several of them apply whether or not you ever move in, rent the place, or spend a single night there.
• 0:37
  SPEAKER_00: In many countries, owning a home is a taxable status on its own, separate from any income it earns and separate from where you live.
• 0:44
  SPEAKER_00: By the way, this is the kind of knowledge our IMI sovereigns, private investor community members trade daily.
• 0:51
  SPEAKER_00: In the active chat, we discuss residency and citizenship programs, tax optimization, and asset protection out loud with peers who have already applied strategies.
• 1:01
  SPEAKER_00: Even more useful are the Sovereign Signals live sessions, where our editor, who's well connected across more than 120 jurisdictions, shares programs, rules, and law changes that have not hit the books yet.
• 1:13
  SPEAKER_00: There's a founding member discount and a link waiting for you in the description.
• 1:16
  SPEAKER_00: Now to the six taxes, starting with the one that stings least.
• 1:20
  SPEAKER_00: Spain charges non-resident owners tax on a home even when it earns nothing at all.
• 1:25
  SPEAKER_00: The mechanism is called an imputed rental income tax.
• 1:29
  SPEAKER_00: Essentially, the tax authorities assume your property generates income simply because you own it.
• 1:34
  SPEAKER_00: The charge takes 1.1% of the property's catastrophe value if that value has been revised in the last 10 years, or 2% if it has not.
• 1:43
  SPEAKER_00: You then pay 19% on that amount as a tax resident in a European Union state, or 24% as a resident anywhere else.
• 1:51
  SPEAKER_00: On a home with a catastro value of 100,000 euros inside that 10-year window, the annual bill for a non-EU owner comes to about 250 euros, a modest sum, but the duty behind it is easy to miss because the tax agency sends neither a bill nor a reminder.
• 2:08
  SPEAKER_00: You file it yourself, and every month you are late, surcharges pile on.
• 2:13
  SPEAKER_00: Spain is not unusual here.
• 2:14
  SPEAKER_00: Portugal layers its own charge on top of ordinary property tax, taking 0.7% a year on the portion of your residential holdings above 600,000 euros.
• 2:24
  SPEAKER_00: So confirm what a country charges an owner who earns nothing and lives elsewhere, because that recurring figure must be one you can live with.
• 2:32
  SPEAKER_00: Still, a few hundred euros a year is survivable.
• 2:35
  SPEAKER_00: The next tax changes the size of the bill entirely.
• 2:38
  SPEAKER_00: Income taxes apply to what a property earns, but a wealth tax applies to what it is worth, whether or not it produces a cent.
• 2:46
  SPEAKER_00: Only four OECD members levy a broad annual tax on net wealth, Norway, Spain, Switzerland, and Colombia.
• 2:54
  SPEAKER_00: Several others tax specific categories of assets, and property is the category most likely to be caught.
• 3:01
  SPEAKER_00: France, for example, taxes property wealth through a charge that applies once the net value of your holdings passes 1.3 million euros on January 1st.
• 3:10
  SPEAKER_00: A French resident owes it on property worldwide, while a non-resident owes it on French property alone.
• 3:16
  SPEAKER_00: Rates go from 0.5 to 1.5%, with mortgage debt deductible.
• 3:21
  SPEAKER_00: Own a home worth 1.5 million euros on the Côte d'Azur, and live in London, and France still sends an annual wealth tax bill.
• 3:29
  SPEAKER_00: Spain has two overlapping wealth taxes.
• 3:32
  SPEAKER_00: The regional one applies to net assets above€700,000, with non-residents charged only on assets located in Spain.
• 3:39
  SPEAKER_00: On top of it, sits a national solidarity tax on large fortunes, introduced in 2022 and now permit, which reaches net wealth above 3 million euros.
• 3:49
  SPEAKER_00: Madrid and Andalusia waive the regional tax in full, and buyers often assume that that leaves them with nothing to pay.
• 3:56
  SPEAKER_00: However, the solidarity tax bites above 3.7 million euros, hold prime Spanish property worth 5 million euros, and it applies even in a full relief region, up to 3.5% on the largest fortunes.
• 4:09
  SPEAKER_00: Switzerland taxes wealth at the cantonal level, with thresholds low enough to reach well beyond the very rich.
• 4:15
  SPEAKER_00: In Zurich, the tax starts at around 80,000 Swiss francs of net wealth.
• 4:20
  SPEAKER_00: So far, every tax is one you can see coming.
• 4:22
  SPEAKER_00: The next one is the tax you forget to file.
• 4:25
  SPEAKER_00: Two kinds of filing sit behind a home abroad, and both punish you for getting them wrong.
• 4:31
  SPEAKER_00: One is the paperwork the properties country expects.
• 4:34
  SPEAKER_00: The other is the disclosure your home country expects.
• 4:37
  SPEAKER_00: On the property side, the danger is the silent filing.
• 4:40
  SPEAKER_00: Spain's non-resident return is self-assessed, and the tax agency Hacienda does not issue a reminder, so the costliest mistake owners make is simply never filing the imputed income on an empty home, with surcharges mounting for every month it's unfiled.
• 4:57
  SPEAKER_00: The second failure is at home.
• 4:59
  SPEAKER_00: A Spanish tax resident who holds property abroad worth more than 50,000 euros has to report it on a foreign asset declaration.
• 5:07
  SPEAKER_00: The old version of that regime stacked penalties so high they could exceed the entire value of what a person held abroad, which is how one retiree reached a bill of€442,000 on€340,000 of foreign savings.
• 5:24
  SPEAKER_00: The Court of Justice of the EU struck that regime down in January 2022, and naturally Spain rebuilt it that same year, but with far smaller fixed penalties.
• 5:34
  SPEAKER_00: However, the duty to file did not go away.
• 5:37
  SPEAKER_00: Italy goes farther and taxes the foreign home directly, charging its residents 1.06% a year on the value of property they hold abroad.
• 5:47
  SPEAKER_00: United States owners face a different map of forms entirely, each carrying its own penalty for amiss filing.
• 5:53
  SPEAKER_00: And assuming nobody will connect the dots is not a plan because tax authorities in more than 100 countries now trade financial account information automatically every year through OECD frameworks like CARF and CRS.
• 6:07
  SPEAKER_00: The country you left and the country you bought property in can compare notes without asking you first.
• 6:13
  SPEAKER_00: Filing correctly still leaves one event you cannot dodge.
• 6:16
  SPEAKER_00: Eventually, you might sell your home, right?
• 6:19
  SPEAKER_00: Selling a home abroad can trigger tax in two places at once.
• 6:23
  SPEAKER_00: Under most treaties, the country where the property is has the first right to tax the gain, and your country of residence can tax it again, with credits designed to soften the overlap, but that don't always work cleanly.
• 6:36
  SPEAKER_00: Local rules can be punishing on their own.
• 6:38
  SPEAKER_00: France taxes a non-residence gain at 19% plus social charges, and the social charge rate applies where you are covered for Social Security.
• 6:48
  SPEAKER_00: Someone covered inside the EU pays only a 7.5% levy, while someone covered elsewhere pays the full 17.2%.
• 6:57
  SPEAKER_00: Mexico, on the other hand, taxes a non-resident seller through the notary at closing, either 25% of the gross sale price or 35% of the net gain.
• 7:07
  SPEAKER_00: Don't ignore the currency trap too, one that catches United States owners by surprise.
• 7:12
  SPEAKER_00: Paying off a foreign currency mortgage can produce a taxable gain measured in dollars even when the property itself barely moved in value.
• 7:21
  SPEAKER_00: You can owe United States tax purely on the exchange rate.
• 7:25
  SPEAKER_00: Selling triggers a bill once.
• 7:26
  SPEAKER_00: A home abroad, however, can hand a country a claim on far more than one gain.
• 7:31
  SPEAKER_00: It can capture your entire worldwide income year after year.
• 7:36
  SPEAKER_00: Ownership can settle a big question.
• 7:38
  SPEAKER_00: Which country holds the right to tax your worldwide income?
• 7:41
  SPEAKER_00: When two countries both claim you as a tax resident, the tie is usually broken by the treaty between them, and most treaties follow the same sequence set out in the OECD model convention.
• 7:52
  SPEAKER_00: The first test is where you have a permanent home available to you.
• 7:56
  SPEAKER_00: A dwelling that is continuously available for your use, owned or rented, can settle your tax residence on its own.
• 8:03
  SPEAKER_00: Keep a permanent home in only one country, and that country wins.
• 8:07
  SPEAKER_00: Buy an apartment abroad and hold it available year-round, and you have handed a second country a strong argument that it is indeed your home.
• 8:17
  SPEAKER_00: Some countries skip the treaty entirely.
• 8:19
  SPEAKER_00: The United Kingdom's statutory residency test can make you automatically UK resident if your only home is in the country and you spend enough time in it.
• 8:29
  SPEAKER_00: Spain looks past accounting to whether your main center of economic interests is there.
• 8:35
  SPEAKER_00: The exposure shows up in the sequence of a move.
• 8:38
  SPEAKER_00: Buy first, relocate second, and cross a residency threshold before you have planned the order, and a country can tax everything you earn worldwide.
• 8:47
  SPEAKER_00: Finally, tax number one.
• 8:48
  SPEAKER_00: A home abroad outlives you, and its jurisdiction can tax it when you die, regardless of where you live.
• 8:54
  SPEAKER_00: France charges inheritance tax on French property even when the person who died and the person who inherits are both non-residents, and Spain and Italy apply the same location-based principle.
• 9:06
  SPEAKER_00: Civil law countries add a second issue on top, deciding who inherits rather than leaving it to you.
• 9:12
  SPEAKER_00: Forced airship rules in France, Italy, and Spain reserved fixed shares of an estate for children and a spouse, and those shares can override the instructions in your will.
• 9:23
  SPEAKER_00: Children can claim their reserved shares against a will that leaves everything to a surviving partner, and the partner's inheritance shrinks to make room.
• 9:31
  SPEAKER_00: There is a route around the succession question though.
• 9:34
  SPEAKER_00: A European Union regulation known as Brussels 4, in force since 2015, lets you elect the law of your nationality to govern your estate instead of the law of your habitual residence, which can castrate forced airship.
• 9:48
  SPEAKER_00: But two constraints keep it from being clean.
• 9:51
  SPEAKER_00: Brussels IV governs succession, not tax, so France still levies French inheritance tax on the French house, no matter which law you choose, and judicial systems have pushed back.
• 10:02
  SPEAKER_00: Germany's federal court refused an English law election that disinherited a son in 2022 on public policy grounds.
• 10:10
  SPEAKER_00: One final trap is in the paperwork.
• 10:12
  SPEAKER_00: A second will drawn up for the foreign property can cancel the main one by accident if it carries a blanket clause revoking all previous wills.
• 10:21
  SPEAKER_00: Now, you put these six taxes together, and the pattern is hard to miss.
• 10:25
  SPEAKER_00: The tax cost of a home abroad extends well past the figure you pay at closing.
• 10:31
  SPEAKER_00: It is a stream of obligations that lasts as long as you hold the property and does not stop when you die.
• 10:37
  SPEAKER_00: But plenty of places charge a foreign owner very little.
• 10:40
  SPEAKER_00: The United Arab Emirates and the territorial tax countries that leave foreign income alone are at the light touch end.
• 10:47
  SPEAKER_00: These taxes mostly concentrate in high-tax civil law Europe, precisely where a great many second homes change hands, and relevant to this channel, particularly in golden visa and residency by investment programs.
• 11:00
  SPEAKER_00: One more piece of this conversation is who can see the home once you own it.
• 11:04
  SPEAKER_00: We mentioned that more than 100 tax authorities now trade your banking data automatically.
• 11:10
  SPEAKER_00: If you want to understand how that CRS web works and how the wealthy legally avoid oversharing their financial info, watch our video on how 100 countries track your money.
• 11:21
  SPEAKER_00: It's on your screen now.