Tax incentives are not an investment criterion

In recent months the market for foreign property has moved like it has not in a long time. In May 2026 Turkey passed a law granting new residents 20 years of tax exemption on foreign income and capital gains. At the same time Cyprus extended the 5 percent VAT rule for primary residences until the end of 2026. In Germany, for the first time in decades, the Bundestag is seriously debating a wealth tax from one million euros.

All of this triggers a predictable reaction: German-speaking buyers start looking for a way out. Tax-friendly countries, foreign property as asset protection, acting fast before the window closes.

That reaction is understandable, but it often leads to the wrong decisions.

A house abroad is not a tax structure

It is a building in a foreign market with foreign developers, foreign climate zones, foreign legal systems and foreign risks. Anyone who bases a property purchase mainly on a tax incentive usually overlooks what actually counts.

What actually counts

Three levels that have little to do with tax. First: ownership law. Who actually owns it? Which contractual framework applies? Who is liable for defects? In Indonesia foreigners may not own land, only lease it. In Mexico there are special rules for the coastal zone. In Turkey a 200,000-dollar threshold for residency is coming. These structures matter more than any tax rate.

Second: the developer and the substance. Who builds the house? What references does the company have? Which materials are actually used, and are they suited to the local climate? A German wall build-up does not work in Cyprus, a Cypriot one does not work in the Portuguese mountains. Ignore this and you build in slowly growing problems.

Third: time and a reality check. Whoever buys within two weeks because of a political threat buys badly. Purchases abroad need 6 to 12 months of lead time for a clean understanding of the market, the developer and the contractual landscape.

Tax incentives are an argument for a location. They are not an argument for a specific property, a specific developer or a specific moment. If you want to use the incentives, have the substance checked first. Otherwise the tax saving is fully eaten up after three years of building defects.

If you are buying concretely in Cyprus, Portugal, Turkey or another market - the pre-buy risk analysis costs 250 euros and takes 48 hours. That is a fraction of what a wrong purchase costs.

Benjamin Fercher is a civil engineer and independent advisor. His principle: substance before tax.