Owning a property abroad brings financial responsibilities that can include meeting local and UK tax requirements.
Every country has a different taxation system, and it’s worth knowing a little more about the tax system in the country where you’re purchasing your new property abroad. The last thing you want after you’ve moved into your dream property is to discover you have a huge tax bill to pay.
What sort of taxes can you expect to pay? Well, that depends on what you’re planning to do with your property. If you’re moving there permanently, or using it exclusively to holiday during the year, you may only be liable for local taxes. However, because they vary widely, both at the time of purchase and whilst you are an owner or occupier, you should get some professional advice. Taxes can include:
• Stamp duty
• Land tax
• Registration tax
• Property transfer tax
• VAT equivalents
To avoid paying too much tax, or getting in difficulty for not paying the right taxes, consult a tax expert; either in your country of purchase, or a UK tax accountant who specialises in tax issues for owners of property abroad. They should be able to advise you properly; so that you only pay the taxes you are liable for.
UK tax on your property abroad
If you are renting out your property abroad, thereby earning an income, you could be liable for tax in the UK. To check this, you need to talk to your local tax office. Explain your plans and they should be able to give you some advice. Remember that the UK has an agreement with certain countries that ensures that British citizens don’t get taxed in both countries for the same thing. Check if the country where you’re buying your property abroad has signed up to this agreement.