Understanding the 2025 International Tax Competitiveness Index: Cross-Border Real Estate Tax Strategies for High-Net-Worth Families

Why is the 2025 tax environment especially important for families buying property overseas?

Many clients ask us, “Is now still a good time to invest in overseas real estate?” The answer is closely tied to shifts in the global tax landscape. Earlier this year, the Tax Foundation released the latest 2025 International Tax Competitiveness Index. This report is not only for tax professionals— for Taiwanese high-net-worth families planning to purchase property in the United States, Japan, or other countries, as well as Chinese investors in the U.S. seeking cross-state opportunities, it highlights several highly practical investment considerations.

In short, tax policies around the world are undergoing major adjustments. Some countries are lowering corporate tax rates to attract investment, while others are tightening capital gains and estate taxes. For investors looking to “fund education with property,” plan for wealth succession, or pursue rental income, choosing a tax-efficient jurisdiction may directly affect your actual investment returns.

Shifts in global tax competitiveness rankings: Where do the U.S. and Japan stand?

According to the latest International Tax Competitiveness Index, the tax environments in both the United States and Japan are changing in the rankings. This has a direct impact on our two primary client groups.

In our experience, tax differences among U.S. states are significant. Texas and Arizona—where Phoenix is located—have long been popular choices for investors due to relatively low state income taxes. However, this report reminds us that looking only at state taxes is not enough—changes in federal tax policy, especially adjustments to capital gains and estate taxes, can have a major impact on your long-term wealth planning.

Japan’s situation also deserves close attention. Yen exchange-rate volatility, property appreciation taxes, and the tax treatment of foreign investors are all facing new adjustments in 2025. For Taiwanese families looking to purchase property in Tokyo or Osaka, understanding these tax changes can help you calculate investment returns more accurately.

Three key tax planning priorities high-net-worth individuals must focus on

1. Estate tax and wealth succession planning

This is the question we are asked most often. Many high-net-worth families purchase property without simultaneously considering the impact of estate tax. The U.S. federal estate tax exemption remains relatively generous in 2025, but this window will not stay open forever. If you own U.S. real estate, investment-linked life insurance (IUL/VUL), or other assets in the United States, you need to plan ahead to ensure your assets can be transferred efficiently to the next generation—rather than being eroded by estate taxes.

For Taiwanese families in particular, cross-border estate tax planning becomes more complex. You may face tax requirements in both the United States and Taiwan. This is not something to postpone—the earlier you plan, the more flexible your options will be.

2. Capital gains tax and property appreciation proceeds

When you purchase property in Phoenix or Texas and sell it a few years later at a higher price, you will need to pay capital gains tax. Long-term capital gains tax rates (typically 15% or 20%, depending on your income level) may appear fixed, but in practice they are closely tied to your overall tax situation.

In our experience, many investors do not fully leverage tax optimization strategies. For example, if you hold multiple investment properties, strategically timing sales or using tools such as a 1031 exchange can significantly reduce your tax burden. For Chinese investors in the U.S., these strategies are especially important because you may own properties across multiple states.

3. Tax treatment of rental income and passive income

Rental income sounds attractive, but it also brings tax complexity. Depreciation, maintenance expenses, and management fees may be deductible, but each item requires careful documentation and planning. If you own rental properties in multiple states, you also need to consider the impact of state taxes.

Texas and Phoenix do not impose state income tax, which is a major advantage for rental-income investors. However, this also means the contrast becomes even more pronounced if you own property in California or other high-tax states. Many clients tell us that after understanding these tax differences, they decided to increase their allocation in Texas or Arizona.

FIRPTA rules cross-border investors must know

If you are a Taiwan resident or a foreign investor outside the United States, you must comply with FIRPTA (the Foreign Investment in Real Property Tax Act) when selling U.S. real estate. This means the buyer must withhold a portion of your sales price (typically 15%) to ensure the IRS can collect the tax.

This comes as a surprise to many international investors. Without advance planning, you may face unexpected cash-flow issues at the time of sale. The good news is that with proper tax planning and documentation, you may be able to reduce or avoid this withholding.

Our recommendation: if you plan to sell U.S. property within the next few years, start preparing FIRPTA-related documentation now. It is not complicated, but it does require advance planning.

What does the 2025 tax environment mean for your investment strategy?

Changes in global tax competitiveness mean that choosing where to invest is no longer just about home price appreciation and rental yields. The tax environment has become an equally important factor.

For Taiwanese families, this means that when selecting U.S. cities, in addition to considering the price growth potential in Phoenix and Texas, you should also consider the long-term impact of state taxes. For Chinese investors in the U.S., this means cross-state investing is not only geographic diversification, but also tax optimization.

In our experience, the smartest investors are not those chasing the highest price appreciation, but those who incorporate tax planning into their investment decisions from the outset. They may choose slightly lower growth potential, yet achieve higher after-tax returns.

Next step: Develop your personalized tax strategy

Changes in the 2025 tax environment are not a threat—they are an opportunity. If you understand and plan ahead, you can make more informed investment decisions.

Whether you are a Taiwanese family planning to purchase property in the United States or Japan, or a Chinese investor in the U.S. seeking cross-state opportunities, tax planning should be a core part of your investment strategy. This is not an after-the-fact remedy, but a proactive strategy.

We recommend that you:

• Assess your current asset structure and tax situation
• Understand the tax environment in your target investment locations
• Consider your long-term wealth succession goals
• Develop a comprehensive plan that integrates real estate investment and financial products (such as IUL/VUL policies and annuities)

Would you like to learn more about a cross-border asset allocation plan tailored to you? Our team is always ready to design a customized plan—schedule a one-on-one consultation. At JN Global, we do more than help you find a property; we help you build a tax-efficient, risk-balanced global asset strategy.