Overseas Property

You have decided to buy a house or apartment abroad. Welcome to an exciting and may be a potentially and dangerous move! Why? The Laws of the Country in which the property is based will be different from the UK and the language may not be English. You must consider how these are going to affect you and the property and we recommend you find a lawyer who is aware of the laws in both UK law and the law in which you are buying. There are many sorry tales of investors not taking simple precautions.

Don’t buy when on your first holiday go back a number of times and rent. Try to go at different times of the year so that you can see it outside the holiday season. Think about security, an unoccupied house is a good target for thieves.

If you are thinking of living there, will you be able to mingle with the local population or would you prefer an expatriate community? How about communication with the UK. Are flights cheap and plentiful so that if you have to rush back for a family illness or crisis it is not impossibility!

Taxation of property is different in each country but if you live in the UK you must declare to the Inland Revenue income you receive and expenses etc that can be deducted from any property even if the net result is a loss. On sale, any profit is also declarable. You will receive credit for the tax paid abroad but only in respect of UK taxes on that income or profit.

The rules on distribution of estates are in most countries set in the law (Unlike the UK) therefore you must make a Will to deal with that part of your estate; another Will must deal the remainder of your estate excluding the overseas property. In addition the concept of Joint Tenancy which is the most common form of joint ownership in the UK is one that does not exist in many counties. So if you intend to buy with another make sure you investigate with a Lawyer how joint ownership is affected by death etc.

Becoming a UK non-resident for tax purposes

Living and working abroad can be great fun but sadly if you have income that originates in the UK you may have to pay UK income tax. Different rules apply to each source of income but property income is always assessable.

You can avoid capital gains tax if you are non-resident. Even then if you become a UK resident again too soon the tax bill can return to haunt you.

Inheritance tax is based on domicile at death. This means that could be living abroad and still pays UK death duties.

How can we help

You need to consider, if you intend just to own a property abroad or if you are buying property to let overseas. If the latter letting you need to consider both the taxation laws in which the property is based and the UK position. It is imperative you do this before letting.

Becoming a UK non-resident for tax purposes

We can help you to take full advantage of living and or working abroad. Planning is the key and we recommend that you contact us in the following circumstances:

  1. Before you go.
  2. Whilst you are overseas if you are considering anything to do with your UK assets.
  3. Before you return.
  4. If you have assets in more than one country and are concerned about taxation.
  5. If you are considering making or revising your Will.

It is imperative that you contact us to guide you.

Further Reading on Overseas Property

  1. Buying a property abroad, by The BBC
    http://www.bbc.co.uk/homes/property/buying_buyingapropertyabroad1.shtml
  2. IR138 Living or retiring abroad?, by Inland Revenue
    http://www.hmrc.gov.uk/pdfs/ir138.htm
  3. Country Buyers Guides, by Property abroad
    http://www.property-abroad.com/buyers-guide/
  4. The Which Guide to Buying Property Abroad, by Jeremy Davies
  5. Understand tax on overseas properties, by Interactive Investor
    http://personalfinance.iii.co.uk/tax/howto_display.jsp?howto_id=2268