Buying Property Abroad Advice
Buying Property Abroad - The Guide
Published on 06 January 2005
Globally we are all on the move!
In fact one in eight of us are considering purchasing a home in the sun in the next five years according to a recent UK survey.
Are you too dreaming of a new life abroad?
If you are one of ‘us’ and have decided that you’d like to see more of the world, experience a different culture and broaden your geographical horizons, this guide to buying property abroad should prove a useful resource.
Brand New Property Investment Fund Opportunity
Published on 10 December 2004
Property investment funds are growing in popularity, after all, they allow for general diversification within an investment portfolio - the key to a portfolio’s potential success - and they also allow an individual to make his or her money go far further through the pooling of investors’ resources.
But of far more interest to us all - they offer real potential for satisfying returns at very low risk to the investor. And Shelter Offshore have come across something even more tasty!
Hot Property
Published on 30 November 2004
The hottest countries for property investment in 2005
Whether you are a property investor looking for a steady and ‘safe’ investment in a proven market or a property speculator willing to gamble on the unknown and undiscovered in the hopes of gaining a significant ROI (return on investment), this article covers the property investment hotspots for 2005.
Essential Advice for Anyone Thinking About Buying Property Abroad
Published on 18 November 2004
The tax, financial and legal considerations of buying a second home abroad.
Globally we are all on the move!
The worldwide property boom does not seem to be abating, in fact more and more of us are looking to buy property abroad - whether we’re after a second home in the sun or a home from home in a brand new location - we are all after overseas real estate!
So what’s fuelling this global fire?
Take the UK as an example - there the housing market is seemingly ever on the up. Those Britons who are acquiring massive levels of equity through their residential property are considering selling up, buying abroad and establishing a pension fund simply on the back of what they earn from their house sale.
Others in Britain can’t afford the first rung on the ladder and are looking abroad to find an affordable home.
Then there’s the state and confusion surrounding the pensions market which is getting ever worse meaning that a growing number of Britons are considering the option of buying a second property abroad to let out for an income towards retirement.
Others just share a commonly held dream of owning a holiday home in the sun!
Whatever reasons you may have for considering buying property abroad, one thing is for certain; before you go ahead and buy you should read this guide and understand some of the far reaching legal, financial and taxation implications of buying abroad!
Your hopes & dreams
Do you share the British national obsession for property prices, equity and re-mortgaging? Did you know that this obsession is as foreign a concept in many other countries as mushy peas or vinegar on your chips!
If you want to buy a second home abroad to make a quick profit, know that a home overseas will not necessarily rise in value and please don’t assume that it will be easy to sell either!
It is essential to check out the property market in your country of choice with these points in mind so that you really do know what you’re getting in to! Do your homework to see whether the market you are interested in can support and sustain your hopes and ambitions for it.
Budgets
When setting a budget for the purchase of your overseas property make sure you factor in the regular travel costs needed for visiting it!
This sounds so obvious but sadly many people are caught out and find that they cannot holiday in their new home as often as they like, or worse still - once they move abroad they find they can’t get ‘home’ for visits to the family etc. Don’t get caught out!
And keep in mind any extra visits you might have to make occasionally to organise repairs and renovation for example.
Other taxing issues
Now, if you intend to rent out your property abroad for parts of the year or even let it on a long term basis you must declare this income to the tax man in your country of residence I’m afraid! Furthermore it may be necessary to declare it in the country in which the new house is located. Make sure you seek solid tax advice before making any concrete buying decisions.
Make sure you know how much it is going to cost you to have an agent manage both the day to day running of your property together with organising the rental side of things for you. You’ll need a good agent in the country you buy in to make sure your best interests are always looked after.
Consider the local tax implications of buying, owning, renting and selling your property. Property and land tax in some countries can make UK stamp duty and council tax pale into insignificance so do be careful when you consider location!
Make a will to cover local inheritance tax laws, and know that the laws of inheritance differ greatly from country to country. Specialist legal advice can always be sought.
Legal fees & legalities tra la la
Factor the legal bills that you will incur when buying, renting or selling your property into your budget. You can be charged all sorts of extras like notary fees, valuation fees, translation fees etc., and if you factor them in you shouldn’t get any nasty surprises!
Be aware of the legalities of any contract you enter into. Find a reputable lawyer, get key documents translated and know that ignorance is never a valid excuse! Not understanding the language in which your key legal contracts are written is a problem, so don’t ignore the problem! Don’t blindly sign on the dotted line. It is your responsibility to get informed.
Always ensure that you seek specialist local advice from independent solicitors, architects and surveyors before considering a purchase overseas.
And when instructing a lawyer, make sure he ensures you do not inherit a debt on the property. It has been known for a developer to borrow money to build a development against the completed development and the debt has then been allocated against each plot as additional security to the developer’s bank. Just make sure you are not liable for any outstanding debts!
Purchasing through an offshore company
Buying through an offshore company to avoid certain taxes, expenses and laws is sometimes an option open to an individual interested in purchasing abroad.
Whether this route is actually the best route is massively debateable!
Firstly it depends on the country in which you’re buying. Secondly, local agents may be incorrectly advising foreigners by basing their advice on the local situation.
This method of approach can be beneficial but it could land you in a whole lot more taxation mess both abroad AND at home!! There are specialist companies out there who can advise you based on your individual situation. It is not a case of one method suiting all. Be careful and get informed, speak to a qualified tax consultant.
If you do buy through an offshore company and wish to take the property out of that company in the future, how easy will that be to do? Will you incur an expense if you decide to do so? Ask the right questions of your adviser, make them work hard for you!
Ask whether there will be further tax liabilities if you decide to sell your company owned property, and what happens if you try to take the profit from the sale? Will you be taxed for example?
Make sure you consider the tax situation from the UK point of view and the local situation in your country of choice.
Affording your dream - mortgages and financial considerations
What option would you like to take when it comes to financing your purchase? Are you considering a second mortgage, cash, a mortgage in the local currency? Know the pros and cons of each option.
Cash may seem like the easiest and best way but do you want to have all that money tied up in a relatively slow to liquidise overseas investment?
A mortgage in the local currency? Have you considered the changing exchange rates, how will this effect the amount you pay monthly compared to the value of the pound? It could be on the positive side! And if not there are options available to you to reduce this risk - consider spot or forward transactions and speak to a financial adviser to find out what’s available to you.
A second mortgage can be a cheaper option at the moment - but remember you’d risk losing both homes if you fell behind on payments!
If you are using a mortgage to finance the property, make sure that this is mentioned in any contract you sign and if possible insist on an ‘opt-out clause’ being written in just in case the mortgage is refused - this will then allow you to have any deposit paid refunded to you. Of course, if possible try to arrange your mortgage ‘in principle’ before agreeing to purchase any property and certainly before signing any contract or paying a deposit as this may avoid hassle in the long term.
If you open a bank account in your chosen country and deposit or transfer money into it, get a ‘Certificate of Importation’ for the sum of money you bring in otherwise you could encounter money laundering and/or tricky tax questions both at home and abroad!!
Consider setting up standing orders locally to pay your regular bills and any ongoing taxes. If you are late with payment services can be cut off and in some countries, getting them reconnected can be a drama in itself! Furthermore, in some countries such as France and Spain, the failure to meet tax payment schedules can lead to court action and possible repossession of your property! Ooooh not good!
And finally
Now, this guide is certainly not exhaustive when it comes to the considerations you need to take when exploring the idea of purchasing a second home abroad.
So, seek professional legal, financial and taxation advice at every step of the way, stay informed and don’t be seduced by the sunshine. Don’t enter into an idea abroad that you wouldn’t entertain back under the rain clouds back home!
And finally don’t let the above points put you off realising your dream - if you buy a second home in the sun you’ll find you never knew you had so many friends all willing to come out and visit you!
And if you are after even more top tips, Shelter Offshore recommend you read the following: -
The Which? Guide to Buying Property Abroad 
Jeremy Davies
For recreation, retirement, or investment buying property abroad has never been more popular.
Over a million British owners now have homes in another country. Unfortunately, buying abroad is fraught with difficulties. Different cultures, languages, currencies and laws make expert advice essential.
The Which? Guide to Buying Property Abroad takes an in-depth look at France, Spain, Portugal, Italy, Florida and Greece.
The book outlines the sort of property you are likely to encounter, looks at local taxes and how much you’ll have to pay, examines local law and how this relates to matters such as inheritance, insurance, liability and land searches, and considers the true cost of holiday homes - assessing estate agents, building societies, euro-mortgages, lawyers, local officials, maintenance charges, utility bills, management fees and the commission charged by letting agencies.
Finally, the book looks at the financial and legal implications of long-term residency, with particular reference to retirement, taxation, inheritance and health-care.
Click here to order a copy directly from Amazon!
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