Overseas Property Investment
Overseas property investment is a firm favourite with British investors who have traditionally focused on investing in popular European holiday destinations such as France, Spain and Italy.
The geographical proximity of these countries to the UK, their membership of the European Union (which has made the transfer of funds and circulation of people easier) and the stability of their legal and tax systems have all contributed to creating a stable environment that provides a perception of security that is of paramount importance to property investors.
The countries mentioned above are still the favourite for British investors. However, other markets are now attracting much interest from British investors, with some of them benefiting from their recent accession to the European Union e.g. Bulgaria and Cyprus.
Investing in property overseas is generally a more complex affair than is portrayed by dedicated television programmes or by the vast majority of the media. Although a professional advisor cannot possibly have a country specific knowledge of all the features for a large number of jurisdictions there are a number of general and critical aspects that an accountant can point out to their clients for consideration.
The first aspect to be considered should be that of researching the conditions of the destination market in terms of :-
Property price trends and statistics
The overall situation of the economy
Stability of the legal and tax system
Restrictions on ownership placed on foreign investors
Restrictions on currency exchange
Exchange gains and losses when converting from the overseas currency to sterling
The second aspect is becoming familiar with the legalities and practicalities of the property purchasing process in the country of choice.
The third aspects to be investigated are:-
The effects of local legislation on property ownership
The transfer of ownership by way of sale or succession
In particular the provision of inheritance tax law (which can be of particular concern in certain countries and would need careful planning.)
Obtaining an understanding of the local taxation applicable to property acquisition, ownership, rental income, disposal gains or inheritance tax is also of paramount importance to an investor.
Finally the interaction of both foreign and UK taxes on the overseas property would need to be evaluated both for compliance and planning purposes and any double tax treaty between the UK and the investment country should be considered to minimise taxation and avoid a double tax charge.
The information highlighted above can be hard to obtain without the help of local professionals.
In the traditional property investment markets of France, Spain and Italy a large amount of information can be gathered from reputable international estate agents.
For those thinking about investing in property in Italy we have prepared a factsheet Investing in Italy which can be obtained free of charge by e mailing the e mail address below.
Article Courtesy Of Stephen Brownlee @ SDB Accountancy Services
