Crowdfunded real estate projects are passive investments that have benefits, including tax shelter offsets.
Methods of reducing tax liability depends on the tax regime of the country where an investor files taxes. Every investor is encouraged to consult with a certified advisor for a full explanation of the tax implications and extent of liability, and to learn how tax benefits, breaks, credits, holidays, or incentives on crowdfunded property investments can be maximized.
It must be noted that taxes (eg, income taxes or capital gains taxes) are generally imposed on profits derived from real estate crowdfunding activities. The rate depends on the countries where the properties are built. For instance, yields (eg, dividends) from investment opportunities arising from the United States are subject to up to 30% withholding tax. The rules apply to both local and foreign investors.
In the UAE, however, foreign and local investors find a bigger room for profit because there are no taxes levied on income derived from funding projects. There are no capital gains, income, sales, or withholding taxes.
Owing to the UAE tax regime, investment opportunities showcased in the HBR portal have higher yields.