Due to the heightened demand for international luxury real estate, selling properties of luxury value is a lucrative business. The same goes for buying. Regardless of whether you’re a buyer or seller, though, the stakes are high, and it requires extensive industry knowledge, great research, and a thorough understanding of the real estate market–including the legal barriers to entry. At Platinum Luxury Auctions, we are experts in luxury real estate auctions and mansion auctions and work to auction luxury homes in the USA and abroad.
In this article, we’ll discuss the numbers, opportunities, and challenges of investing in international luxury real estate and certain regulations in various countries. If you’re looking to make an impact on the world of international luxury property, whether through buying or selling, read on!
The Stats Behind the International Mansion
Due to the highly changing and evolving nature of the luxury real estate market catering to the needs of high-net-worth individuals (HNWIs), we’re aware that exclusive and high-end properties that fit their desires may be hard to come by. Add to that the changes in the global economy and legal regulations behind purchases and sales; the luxury market has stayed resilient, with several luxury properties selling at a premium rate.
One of the main drivers of luxury market growth is the growing number of HNWIs internationally. According to a recent report by Knight Frank, the number of these high-net-worth individuals will increase to 2.7 million by 2025, an increase of about 20% from 2020. As the supply grows, the demand for international luxury properties will as well.
The Current Luxury Market Opportunities
Due to the state of the current luxury market, there are opportunities for both buyers and sellers, especially in terms of learning about the laws and regulations behind sales and purchases. Laws will be different based on geography and location. For example, if properties are oceanfront homes, mountain retreats, or urban penthouses. And if these homes are used to generate rental income when they’re not being used as vacation homes, more laws will come into effect.
For sellers, their properties will grow in value over time, contributing to them becoming a solid investment. A luxury property that’s sold at a premium price will continue to grow in value as areas become more well-known and populated. With the right strategies in place, anyone can understand and navigate the international luxury property market.
Understanding regulations and legal requirements
When selling international luxury properties and buying as well–even if you’re working with an agent–it’s vital to understand and know the regulations and laws in the market. We’re talking about taxes, ownership laws, and the transfer of ownership procedures. It’s recommended to hire a local attorney and local real estate agent who has extensive knowledge of the local luxury market and knows the regulations, so they can be your guide and support through the process.
Legislation Around The World
Let’s get into some of the more general aspects of laws and regulations around the world when it comes to luxury properties so you can be protected when you decide to take the leap yourself.
Legislation in Italy
What is a luxury property in Italy?
With the lens of a legal and fiscal perspective, the Italian luxury property climate of real estate involves castles, as well as other historic property types like historic villas, mansions, and palaces. For example, look at these luxury properties for sale in Italy: Villa Romanelli and Villa Gavazzini. Because it’s Europe, expect rich history, royal generation footprints, and overall picturesque beauty.
Before signing any paperwork, double-check the legal and fiscal category of the property. This changes based on the type of property. If you need advice on managing property services or information, you can search for Italian real estate law practices. We always recommend hiring a lawyer and a local agent first.
Legislation relating to Italian luxury property
Italian law details the purchase tax and annual municipal tax rates on luxury properties in Italy. Many people believe that luxury homes are very large; in terms of European standards, many aren’t. They might have a lot of land but not necessarily property square footage. Real estate location, cultural value, and quality of finishes will also categorize the property in terms of luxury standards.
Buying a luxury property means that, as a buyer, you won’t be able to receive specific benefits around property registration tax. And once you become the owner of the property, you will not qualify for municipal tax deductions and exemptions–keep this in mind when you buy.
According to an official government website, “Italian law uses two sets of guidelines to determine luxury property: Ministerial Decree 2/8/69 and cadastral criteria.”
Legislation in France
When locating the ideal pied à terre in France, you will need to employ a real estate agent (“agent immobilier”). If American buyers feel confident with their French and speak with ease, they may also be keen to venture by themselves and directly purchase from an owner.
Regardless, once a purchaser selects their property, both properties agree on a purchase price, and both the buyer and seller will sign a contract also called the “promesse de vente” or a “compromise de vente.” The buyer will then make a deposit that’s worth 5-10% of the purchase price. Carefully read the contract so you don’t have to worry about any issues in the future. The prospective buyer will have a seven-day resting period during which they can void the preliminary contract.
Because things move slowly in France, after the signing of the contract, it may be a few months before both parties sign the final sales agreement, and the buyer can then own a piece of French property (“bien immobilier”).
Legislation in the Dominican Republic
As foreign buyers in the Dominican Republic (DR), foreigners are granted the same ownership rights as Dominican citizens. However, there are certain zones called Restricted Zones that are off-limits to foreigners, although there are some exceptions. Apart from these restricted areas, foreigners can purchase, own, and sell real estate without any other legal requirements. This is a huge advantage to buyers invested in the country’s real estate market.