Strategic Second-Home Ownership: Tax-Efficient Real Estate Investment in High-Growth International Markets

The ultrawealthy are increasingly leveraging second-home ownership as a strategic tool for wealth preservation, combining financial benefits with lifestyle advantages. In 2025, this trend is accelerating as investors seek out high-growth international real estate markets with favorable tax regimes. These markets offer not only appreciating property values but also opportunities to diversify assets, hedge against inflation, and access residency or citizenship programs.

Tax Advantages in International Markets

A critical factor driving second-home investments is the absence or reduction of property taxes. Jurisdictions like Malta, Vanuatu, and the UAE impose no property tax at all, while the Netherlands and St. Kitts and Nevis levy rates as low as 0.5% [3]. The UAE, in particular, stands out for its tax-free environment: rental income is not taxed at the federal level, and there are no capital gains taxes on real estate transactions [2]. These features make such markets ideal for investors seeking to minimize tax liabilities while capitalizing on long-term appreciation.

Emerging markets such as Lisbon and Geneva are also gaining traction. Portugal’s Golden Visa program, though closed to new applicants, has left a legacy of investor-friendly policies, while Switzerland’s emphasis on privacy and political stability continues to attract high-net-worth individuals [1]. Cyprus and Greece further enhance their appeal with low property tax rates and residency programs tied to real estate investments [3].

High-Growth U.S. Markets and 2025 Tax Reforms

While international markets dominate headlines, U.S. cities like Buffalo, New York, and Indianapolis, Indiana, are emerging as tax-efficient second-home destinations. Buffalo’s median home value of $239,000 and rapid 12-day sales cycle offer entry-level affordability in a growing market [2]. Indianapolis, with its median home price just above $230,000 and 16-day sales pace, benefits from steady job growth and accessible housing [2].

The 2025 tax reforms amplify the appeal of real estate investments. The permanent restoration of 100% bonus depreciation for qualifying properties and relaxed interest deductibility rules under IRC Section 163(j) enhance cash flow and reduce financing costs [4]. These changes, combined with the U.S. tax-and-spending bill’s support for commercial real estate fundamentals, position long-term rental markets like Austin, Texas, and Phoenix, Arizona, as prime opportunities [5].

Strategic Considerations for Investors

Beyond tax efficiency, second-home ownership offers strategic advantages. Cities like Miami, London, and Dubai serve as global hubs for mobility and wealth diversification, with Miami’s tax-free environment and Dubai’s Golden Visa program providing dual benefits of investment and residency [3]. Naples, Florida, exemplifies the blend of lifestyle and financial appeal, with a high ratio of second-home ownership [3].

Investors must also consider macroeconomic trends. High mortgage rates in the U.S. have increased demand for rental properties, making long-term rentals in cities like Atlanta, Georgia, particularly attractive [5]. Meanwhile, global investors are prioritizing markets with political stability and strong legal frameworks, such as Switzerland and Portugal [1].

Conclusion

Strategic second-home ownership in 2025 requires a nuanced understanding of tax regimes, market dynamics, and residency incentives. By targeting high-growth international and U.S. markets, investors can optimize wealth preservation while aligning with broader trends in global mobility and asset diversification. As tax policies and economic conditions evolve, the interplay between real estate appreciation, tax efficiency, and strategic location will remain central to successful investment outcomes.

**Source:[1] International Real Estate Investing Guide for 2025 [https://www.globalcitizensolutions.com/investing-in-international-real-estate/][2] 30 best countries for property investment: updated list in 2025 [https://imin-caribbean.com/blog/best-real-estate-investment-countries/][3] Top 20 Cities Where the Ultrawealthy Buy Their Second Homes in 2025 [https://www.businessinsider.com/top-20-cities-the-ultrawealthy-buy-second-homes-in-2025-2025-8][4] 2025 Tax Reform: Real Estate Impacts Explained [https://www.cbh.com/insights/articles/2025-tax-reform-impact-construction-real-estate/][5] The 15 best long-term U.S. rental markets in 2025 [https://www.minut.com/blog/best-long-term-rental-markets-2025]