The exit is a separate financial event
Buyers plan the purchase in detail and treat the sale as something to think about later. The sale is where two tax systems can reach for the same transaction at once, where money can be withheld before you see it, and where the amount taxed may bear little resemblance to the profit you feel you made. It is also the point at which decisions taken years earlier, particularly about record-keeping, either save money or cannot be undone.
The general principle in international tax practice is that the country where the land physically sits has the first claim on a gain from selling it. Your country of tax residence may tax the same gain too, usually with some mechanism to relieve the double charge. Both need planning for.
The exit sequence
1. Is the gain taxable in the property’s country?
Most countries tax gains made by non-residents on local real estate. Some apply reliefs based on length of ownership, use as a main home, reinvestment or the seller’s age. Whether any are available to a non-resident is a jurisdiction-specific question.
2. How is the gain computed there?
The general shape is proceeds minus an allowable base cost. The disputes are always about what goes into the base cost. Commonly considered are the purchase price, transfer tax paid on acquisition, notary and legal fees, agency commission, and capital improvements evidenced by proper invoices. Ordinary repairs are frequently excluded. Some systems adjust the base cost for inflation, some taper the gain with holding period, and some do neither.
3. Withholding at source
Many countries require the buyer, the notary or an agent to retain a percentage of the sale price and pay it to the tax authority when the seller is a non-resident. This is a payment on account rather than a final tax. If your actual liability is lower, you reclaim the difference by filing a return, which takes time and requires local registration.
4. Clearances and filings
Some jurisdictions require a tax clearance certificate before the transfer can be registered, or require the seller to be up to date on recurring property taxes. There will be a filing deadline for the gain, separate from any withholding already made.
5. Your home country
If you are taxed on worldwide income and gains, the same disposal is reported at home. Relief usually comes as a credit limited to the home tax on the same income, or as a treaty exemption. Two traps recur. The credit may be capped, so the effective rate becomes the higher of the two systems. And the home country typically recomputes the gain under its own rules.
6. Other exit costs
Agency commission, legal fees, any early repayment charge, the cost of discharging the mortgage, certificates required to market the property, and in some places a municipal levy on the increase in land value.
Worked example one: how deductions change the gain
These figures are invented to demonstrate the structure. Whether each item is deductible depends entirely on local rules.
Suppose you sell for 260,000 in local currency, having bought for 200,000, so a naive gain of 60,000. Acquisition taxes and fees were 16,000, documented improvement works cost 14,000, and sale commission is 6,500.
Adjusted base cost = 200,000 + 16,000 + 14,000 = 230,000. Gain before selling costs = 260,000 minus 230,000 = 30,000. After the 6,500 commission, the taxable gain is 23,500 against a naive 60,000. The difference is a function of documentation. Invoices you cannot produce are deductions you do not get, which is why improvement receipts should be kept from day one.
Worked example two: the currency effect
Suppose currency A is your home currency and currency B is the property currency, both invented for this illustration.
You buy for 200,000 B when 1 A = 1.00 B, so a cost of 200,000 A. You sell for 210,000 B when 1 A = 0.90 B, meaning currency B has strengthened. Proceeds are 210,000 / 0.90 = 233,333 A.
In the property’s currency the gain is 10,000 B. In your home currency it is 233,333 minus 200,000 = 33,333 A. If your home country computes gains in its own currency, as many do, it may tax a gain several times the one recognised abroad, while the foreign tax credit was calculated on the smaller foreign figure. The reverse can also happen, producing a home-country loss on a foreign-currency profit.
| Exit item | Who administers it | Why it matters | Where to confirm the detail |
|---|---|---|---|
| Gain in the property country | Local tax authority | Usually the primary charge | Local tax adviser, authority guidance |
| Withholding at source | Buyer, notary or agent | Reduces the cash you receive at completion | The notary or the completion statement |
| Home country charge | Your residence country | May exceed the foreign charge | Home tax adviser, treaty text |
| Double tax relief | Both, via treaty or domestic rule | Determines the effective total rate | The applicable treaty and home filing rules |
| Mortgage redemption | Lender and registry | Early repayment charge plus discharge cost | The loan agreement |
Records that determine the outcome
- The purchase deed and the completion statement showing every cost paid.
- Invoices for improvements, in your name, with the property address, from registered contractors.
- Evidence of any tax already paid or withheld.
- Exchange rates on the dates of acquisition and disposal, since home computations may require them.
- Proof of the origin of the original purchase funds, which some countries require before sale proceeds may leave.
Timing and structure
Holding-period reliefs, filing deadlines, tax years that differ between the two countries, and the treatment of a sale of shares in a property-owning company rather than of the property itself all affect the outcome, and they interact. We would raise the exit question with an adviser at the point of purchase, because most of the levers, such as how title is held and how records are kept, only exist at the start.
Tax rules differ by country, by treaty and by personal circumstances, and they change. Nothing here is tax advice or a statement of any country’s rates. We would take coordinated advice from qualified tax professionals in both countries before agreeing a sale.
How to Use This Guide
Every worked example on this page is illustrative. The figures are chosen to show how the calculation behaves, not to report current market rates. Costs, tax rules and eligibility criteria differ by country and change over time, so take the method from this page and put your own current figures into it. Browse the rest of our guides, or see how we source and check our comparison figures on the about page.
Information only. This article explains how costs and rules are structured. It is not financial, tax, legal or immigration advice, and it is not a recommendation to buy any property, vehicle or investment. Confirm anything that affects a decision with the relevant local authority or a qualified professional before you act on it.
Last updated: August 14, 2026