I've heard that taxes vary hugely between the two types of properties for foreign investors. Also, the rate of return on investment is also poorer on residential property from what I've heard. What would you advise?
In principle, and other than a commercial choice, there is no difference in the immigration application. In a new project, commercial property sales are applied VAT of 18% rather than the 1% applicable for residence units less than 150 sqm. Return of investment has various factors and each property needs to be examined thoroughly.
All commercial properties have an 18% VAT. For residential properties, this depends on the property size. Properties over 150sqm have the same 18% VAT; however, properties under 150sqm have only a 1% VAT. Income tax is same for both commercial and residential properties, 20-25%, that is paid by the landlord. Depending on buyer criteria, you can apply for VAT exemption.
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