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Buying Property Abroad

Not so long ago buying property abroad was meant for the rich, but times have changed and thanks to no frills airlines, the enlargement of the European Union and the ease of obtaining overseas mortgages, acquiring property abroad has never been so easy.

International real estate opportunities are springing up everywhere for every budget; whether you are looking for a secluded Château in France or a plush apartment in Spain, there has never been a better time to invest in the market.

Property investment and second homes abroad is no longer reserved for the rich, new countries are opening up their markets to foreign investors and have made the process of acquiring property easier for anyone pursuing that first step on the overseas property ladder.

The most common questions we get asked are:

What tax must I pay when I buy property abroad?
If you rent out the property then you will pay local taxes on the rent received after deducting any direct cost in relation to renting the property. You will also need to include this income on your UK tax return.

If you move abroad then you will have no UK tax to pay, provided you satisfy the HMRC non resident rules.

What about Capital Gains Tax?
This depends on if you live in the UK and it also depends on where you or your parents where born. With professional advice this is a tax that can be avoided or mitigated. The first step in reducing this tax would be to buy the property in joint names with your spouse or adult children.

What about Inheritance Tax?
This is a very complex area and depends on individual circumstances. Again, it is possible to substantially mitigate this tax and the first step for everyone with overseas property is to have a tax efficient will drafted. I would suggest you have two wills, one in the UK and one in the country where you own your second property. A good time to do this would be when you buy your overseas home.

I want to emigrate and pay the lowest taxes?
The best place, for most of us is Dubai where they have 0% tax and is only 6 hours away from the UK. However properties are quite expensive there and in the summer months can get very hot.

Overseas Mortgages
It is advisable to have some sort of finance or mortgage in place, before jetting off to look for your dream home in the sun, so that you are in a position to make a firm offer, once you have found a suitable property.

Many people raise finance by releasing capital from their UK home, whilst others simply get a new mortgage on their new overseas holiday home. Mortgages for overseas properties can be arranged in the UK, or in the country of purchase, and providing you deal with a respectable international bank or building society, then both options are equally valid.

Investment Potential
If you’re looking to buy investment property abroad make sure you research the property market of the country you’re examining. Look at it from the points of view of stability, growth potential and the liquidity of the resale market.

Property Purchase via an Offshore Company
The option to establish an offshore company for the purchase of real estate abroad is an option available to most people and by using an offshore company, you can sometimes reduce your taxation liability, avoid certain expenses and even property laws. But the applicability of this option is something that can only be determined on an individual, case by case basis.