The exit, decided at purchase

Every house is sold twice: once when you buy it and once when you sell it. The second sale is taxed according to rules that were set before the first, and those rules differ between the hotspots more than the prices do. A gain of five million is worth five million in Monaco, roughly four and a half in Germany after ten years, three and a half in Austria, and something in between in France depending on how long you waited.

The rules, in one table

Monaco, Dubai

No capital gains tax for individuals. The exit is the price less the agent.

Germany

Nothing after ten years of ownership for a privately held house. Before that, the gain is taxed at income rates, which for a large gain approaches half. The cleanest long hold in Europe.

Italy

Nothing after five years for an individual; twenty-six per cent before.

Austria

A flat thirty per cent on the gain, whenever you sell. No holding-period relief.

France

Nineteen per cent income tax that tapers to nothing after twenty-two years, plus social charges of 17.2 per cent, or 7.5 for EU residents, that taper to nothing after thirty, plus a surtax of up to six per cent on large gains.

Spain

Nineteen per cent for a non-resident, whenever you sell, and a three per cent retention on the price on account.

Portugal

Half of the gain is added to income at progressive rates for a non-resident: roughly a fifth to a quarter of the gain.

England

Twenty-four per cent on residential gains, for non-residents on gains since April 2015.

Switzerland

A cantonal property-gains tax, high on a quick sale and reduced by the years of ownership: halved in Zürich after twenty years, reduced by 1.5 per cent a year beyond ten in Graubünden.

United States

Federal long-term rate plus surtax, just under twenty-four per cent; New York adds state tax; a fifteen per cent withholding on the price for foreign sellers is reconciled against the actual tax.

Why it decides the purchase

Because it changes which house is the better asset. Two villas, one in Kitzbühel and one in Grünwald, both doubling over twelve years. The Austrian owner pays thirty per cent of the gain; the German owner pays nothing. The Bavarian house has returned a third more on the same price movement, and the buyer who modelled it bought in Bavaria.

It changes the holding period too. In France the taper makes year twenty-two worth waiting for; in Italy year six; in Germany year ten. A family that sells a Riviera estate in year nineteen has thrown away a large part of the relief for the sake of three winters.

Years to a tax-free exit in Germany

Years to a tax-free exit in Italy

22 / 30

Years to a tax-free exit in France, for the tax and the social charges

Years to a tax-free exit in Monaco and Dubai, and never in Austria

The seller's costs

The tax is not the only line. The agent takes five per cent in Spain and Portugal, four in France, six in Monaco, three in Italy and Switzerland, a share in Germany and Austria, two in Dubai and, still, around five in the United States. Legal, the energy certificate, the notary's share where the seller pays one, and in Spain the plusvalía, the municipal tax on the land value, which is small and always forgotten.

The return on a house is the price you sell for, less the tax, less the agent, less every year it cost you, against the price you paid plus the door. Most buyers know the first number and the last.

What the exit instrument is for

Modelling it

The exit instrument takes the purchase price and year, a growth rate or a sale price, the jurisdiction and your residence, and applies the rules: the German and Italian holding periods, the French taper year by year, the Swiss reductions, the flat rates elsewhere. It returns the net proceeds and, with the acquisition cost and the holding cost from the other instruments, the annualised return of the whole hold. Run it for the year you are likely to sell, and for the year after, and buy accordingly.

Run the numbers

Exit & Net Proceeds

What is left after capital gains tax, agents and costs in the year you are likely to sell.

Open the instrument

What to keep from the day of purchase

Every euro of acquisition cost: the transfer tax, the notary, the legal, the agent. In most jurisdictions it reduces the gain.
Every invoice for works that improved the house rather than maintained it. Same reason.
The date. Not the deposit, the deed.
The structure. A house bought in a company may be sold as shares, which in some places changes everything.