Exit Strategies for International Real Estate: Planning Your Way Out

The exit is where real estate investment theses are proven or disproven. An apartment in Dubai that appreciated 40% over five years delivers that gain only if the investor can sell at the right price, at the right time, with manageable transaction costs and tax liabilities. For cross-border investors, the exit is further complicated by currency repatriation rules, capital gains tax obligations in multiple jurisdictions, and the practical challenges of selling a foreign property from a distance. Planning the exit before the entry is not pessimism — it is the mark of a disciplined investor.

The Three Exit Pathways

International real estate investors have three primary exit options, each with distinct financial and operational implications.

Outright sale is the most straightforward exit: the property is sold to a third party, the mortgage (if any) is repaid, and the net proceeds are repatriated to the investor's home country. The key variables are transaction costs (typically 5–10% of sale price across Arkon's four markets), capital gains tax (which varies significantly by jurisdiction and holding period), and the time required to find a buyer and complete the transaction. In liquid markets such as Dubai and Miami, well-priced properties typically sell within 30–90 days. In less liquid markets or during downturns, the process can extend to six months or more.

Refinancing allows the investor to extract equity without triggering a taxable event. If a property purchased at €400,000 has appreciated to €600,000, a refinance at 60% LTV releases €160,000 in cash (assuming the original mortgage has been partially repaid) while retaining ownership of the asset and its future income stream. This approach is particularly effective in markets with low mortgage rates, where the cost of the new debt is comfortably covered by rental income. The limitation is that refinancing requires access to local mortgage markets, which may be restricted for foreign nationals in some jurisdictions.

Hold and transfer — retaining the property indefinitely and eventually transferring it to heirs or a family trust — is the preferred exit for investors whose primary objective is wealth preservation rather than liquidity. This approach avoids capital gains tax on appreciation (in jurisdictions where death triggers a step-up in cost basis, such as the US) and maintains the income stream across generations. The operational challenge is ensuring that the property management structure is robust enough to function without the original investor's active involvement.

Transaction Costs by Market

Understanding the full cost of exit is essential for accurate return calculation. The following table summarises the primary transaction costs for sellers in each of Arkon's four core markets.

Miami's higher agent commissions reflect the US market structure, where buyer's agent fees are typically included in the seller's commission. Recent changes to NAR commission rules may reduce these costs over time, but the transition is ongoing.

Capital Gains Tax Considerations

Capital gains tax on property sales is levied in all four markets, but the rates, exemptions, and applicable rules vary considerably.

In Russia, non-residents pay a flat 30% capital gains tax on the profit from property sales, with no exemption for long-term holding. Residents benefit from a five-year exemption (reduced to three years for inherited or gifted properties), but foreign investors are almost always classified as non-residents for tax purposes.

In the UAE, there is currently no capital gains tax on property sales for individuals, making Dubai one of the most tax-efficient exit environments globally. This may change as the UAE implements broader tax reforms, but no capital gains tax on residential property has been announced as of 2025.

In Spain, non-residents pay a flat 19% capital gains tax (for EU/EEA residents) or 24% (for non-EU residents) on the profit from property sales. A 3% withholding is applied at the point of sale, with the balance settled in the annual tax return. Long-term holding does not reduce the applicable rate.

In the US, non-resident aliens pay 15–20% federal capital gains tax on property sales, plus applicable state tax (Florida has no state income tax, which benefits Miami investors). FIRPTA withholding of 15% of the gross sale price is applied at closing, with the balance refunded after the tax return is filed — a process that can take 6–12 months.

Building the Exit into the Investment Thesis

The most common mistake in cross-border real estate investment is treating the exit as an afterthought. A disciplined approach requires modelling the exit at the point of acquisition: calculating the expected after-tax, after-cost proceeds under base, optimistic, and pessimistic scenarios, and ensuring that the investment delivers an acceptable return even in the pessimistic case.

For investors who anticipate holding for five years or more, the exit modelling should also account for the possibility that market conditions at the point of sale may be less favourable than at acquisition. Building a margin of safety — buying at a price that generates acceptable returns even with modest appreciation — is the most reliable protection against exit risk. Arkon's deal scoring system incorporates an exit cost adjustment that reduces the headline return figure by the estimated transaction costs and tax liabilities, providing a more accurate picture of net realised returns. View Net Return Estimates