Investing in real estate is one of the most beneficial investments you can make. Many countries, or should we say almost all the countries except a few, charge their citizens an amount called “property tax.” However, there are always ways through which you can either reduce these taxes or completely evade them (legally). Real estate investment is an excellent way of capital appreciation as well as financial security. Unfortunately, some people think they have to pay the tax on a property only when they use it for rental income. CRA doesn’t seem to agree with this thought much.
The Reason for Collecting Property Tax
The countries that charge the highest property taxes are usually heavily metropolitan in the general architecture. Property tax or Real estate tax is also like many other taxes utilized by the municipal authorities in the upkeeping of public properties such as libraries, parks, schools, hospitals, roads, and others. Real Estate taxes in Canada are also collected and spent on the maintenance of a streamlined government.
What are Tax Havens?
There are places in the world where property tax, income tax, services tax, and all other effective taxes are either very low or not present at all. Such places or countries are labeled as tax havens. Tax havens usually include those countries that have very low effective tax rates for foreign investors. Though very painful for the authorities of other taxed-propelled economies, these are ideal places for nomadic entrepreneurs. Then some countries may or may not have additional taxes, but they certainly don’t have any property tax. Such countries provide ample opportunities for financial secrecy for shady income holders. Here is a list of 21 countries with minimum or no property tax.
- Cook Islands
- Cayman Islands
- Norfolk Island
- Sri Lanka
- Turks and Caicos Islands
- Faroe Islands
- Saudi Arabia
- United Arab Emirates
How Tax Havens Manage Without Taxes
As we already mentioned that Tax havens are not completely tax-free. They charge a low amount of tax from their locals. Such countries rely on other sources to furnish their needs of maintaining the municipal matters. These sources can include high customs or import duties on public corporations.
Benefits of Professional Accountants for Real Estate Tax
Unfortunately, if you live in Canada and own a property, there are regular property taxes for you. But these real estate taxes are for our own good. This is why it is essential for every citizen who owns a property to understand their duty of paying real estate tax in time. There are professional accounting firms in Canada that help the residents understand their property taxes and how to pay them in time. Professional accountants can also help real estate agents or real estate investors with their businesses.
Although tax havens provide a good opportunity for entrepreneurs who have global-level goals in their minds, it also becomes a significant source of revenue loss for the countries that collect heavy taxes. Canada also has to suffer billions of dollars in tax revenue loss due to such foreign investments. Many Canadian entrepreneurs have made hefty investments in foreign countries where there is minimum or no tax at all to avoid reporting to the CRA.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.