Tax Tips for Foreign Property Owners

If you are looking to invest in property, then depending on where you live in the world and how much properties are near you, you may consider going abroad for your investments. You could invest and rent to businesses, as well as use to rent out for the vacation market. When you do the sums, it could out cheaper this way. But does it when you think about the tax implications of having properties in a different? Here are some considerations if you are thinking about investing in property abroad.

 

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Will You Still Pay Tax in Your Country?

 

To be fair, this is more of a warning than a tip. But investors from the UK, for example, will still have to pay UK tax for the property that is in a different country. It could include income tax that from any money that you earn from it, or even capital gains tax if you sell up. The same for inheritance tax if you still own it but have passed it down to family. It can vary from country to country, but if you’re looking to get into property abroad, using a site like highreturnrealestate.com/turn-key-rental-properties-investment/, for example, then checking what tax you pay is going to be important. You don’t want to get stung with a huge bill or fine; ignorance is not an excuse.

 

Main Residence Tax Relief Could Be Possible

 

In most legislation, there is nothing stating that a vacation home abroad can’t be listed as your main residence, even if you’re not there all of the time. Doing so can help when it comes to capital gains tax. However, you will have to spend some time over there to qualify. So usually within two years of buying the property (it will vary from country to country), you can make a decision as to if it is going to be your main place of residence or not. If you find you’re there a few times a year, then it could be worth doing. If you have found that it is rented pretty much all year round, then there may not be chance for you to do so. Also, if you have a property in your main country of residence, then the whole thing could backfire when it comes to selling that property. So you’d need to remember to re-elect what your main residence is, when it comes to selling either of them.

 

Understanding Local Taxes

The thing with buying property abroad is that the country you are buying in is likely to tax you too. The taxes may apply to the sale or rental income from the property. There could also be annual taxes to pay, according to articles like this one from Transfer Wise: https://transferwise.com/property-abroad-taxes. The thing to be cautious of is that not all countries that you buy in are going to have a tax system that works alongside your own country’s. So when it isn’t compatible, you may not get any relief from your home country, when paying taxes abroad. So bear this in mind when you are looking at possible investments in property abroad.