U.S. property taxes on luxury homes are less than one-fifth the global average, making them among of the lowest in the world, a new study has found.
Properties of $1 million in the U.S. are subject to an average 0.6% in taxes, or $6,000, compared with a global average of 3.3%, or $33,038, according to UHY LLP, a London-based network of independent certified accountants.
Home taxes in the U.S. vary across the 50 states, with Hawaii levying the lowest rate and Illinois the highest.
By comparison, Belgium imposes 11.3% ($113,131) in taxes on properties worth $1 million, the highest rate of any country. New Zealand, which has no local or federal transaction taxes on real estate, ranks at the bottom of the study’s list of 26 countries, with 0.0%.
Low property taxes encourage relocation of senior executives and overseas investment from high-net-worth individuals, according to UHY.
“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,” said Dennis Petri of UHY Advisors.
Conversely, high property taxes can put a strain on job creation and business investment—and on the wider economy—if companies must offer much greater incentives for senior executives to relocate, according to Petri. “Where there are excessively high taxes, these markets could become less attractive,” he said.
Looking at particular regions and blocs, UHY found that average taxes on properties worth $1 million vary from 2.3% for BRIC countries (Brazil, Russia, India and China) and 3% for the Group of Seven (the U.S., Canada, France, Germany, Italy, Japan and the U.K.) to 3.8% for Europe as a whole.
Property Taxes for Homes Worth $1 Million
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