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Expat Investor : October 2007
PROPERTY INVESTMENT October 2007 EXPAT INVESTOR 21 HM Revenue and Customs announced plans for a crackdown on non-declaration of property income earlier this year, in the belief that billions of pounds of tax are being withheld by investors failing to declare offshore assets. It is thought many investors are unaware that HMRC's tax crackdown on overseas properties Survey vital when buying in Spain Fast Facts 88471 Here are some tips on minimising the tax burden on an overseas property investment: Do thoroughly research the tax system of the country you are considering an investment in, with a tax adviser if necessary. Do take advantage of any amnesty the government offers. Do look into the tax breaks available to avoid paying tax in both the country you've invested in and here in Britain. Don't be tempted to take a short- term view of your investment. Don't think saying nothing will protect you from paying tax -- the authorities have strong powers to investigate those breaking the law. Don't be cajoled into making a decision on a property investment until you have done sufficient research. It is important to invest with a property investment consultancy you can trust. Don't be afraid to check with a UK tax expert who deals with property investment in the country you are considering. To find out more from Property for Life, enquire through the fast facts number below. calculating how profitable a property could be, but should also be aware that there are still ways to avoid being stung by a large tax bill. It is vital to understand all of the tax implications when buying overseas property, both in the country where you are investing and here in Britain. For instance, many people believe that if you own a property in France, you can avoid paying tax on your rental income simply by having a French bank account. That is simply not the case, and the authorities now have the power to find out about this income and act upon it. Investors must be prepared -- that is the key. Burying your head in the sand and hoping no-one finds out about your income is both against the law and naïve, because there are ways to minimise the tax you owe. A good example is to take a long- term view and plan not to make any income on the property on a month- to-month basis. By ploughing rent money back into the property's mortgage there is no profit, and the only tax you need pay is capital gains tax when you come to sell it. they must declare income earned from overseas property. Investors buying property abroad should factor in taxes when David Austin, Managing Director of Property for Life, warns investors to be prepared to submit their income declarations from overseas property to the UK's HM Revenue & Customs. Many Britons dream of owning a property in Spain, but research shows that when buying property abroad, only three in 10 Britons have a survey carried out. Banco Halifax Hispania believes that the importance of having a survey carried out cannot be overlooked when buying a property in Spain, as there are a number of things that could go wrong with the property which are not immediately obvious to the untrained eye. Although surveying fees will increase the purchase cost, this sum Fast Facts 88470 is a relatively small price to pay for peace of mind, compared to the expense of trying to sort out unexpected difficulties in the future. It also makes sense to know exactly what you are buying into. A professional surveyor will be able to identify signs of damage or causes for concern. Finding out about these potential problems at an early stage of buying may even help the renegotiation of a cheaper sales price to reflect the cost of repairs. Banco Halifax Hispania reports that it offers property purchasers an approved panel of English speaking Spanish surveyors who can assist you during your property purchase. The Bank says it can also recommend English speaking Spanish solicitors who will ensure that all aspects of the purchase, including planning permission, title deeds and other legal requirements are satisfactory and will investigate the property as thoroughly as possible. They will also be able to carry out searches and legal investigations and check that there are no outstanding debts on the property. This process is likely to be much smoother if the surveyor in Spain is fluent in English and has local knowledge and experience of acting for British customers. "It is also good practice to use an independent solicitor rather than one that has been appointed by the agent that you are buying the property from, to protect your best interests." VISIT www.expatinvestor.com Request more information Read updated news Links to advertisers Fast Facts -- WHEREVER YOU ARE IN THE WORLD