Fallen in love with your holiday destination? Here’s how to go about buying an overseas property – and the pitfalls to avoid

It seems that some people simply aren’t prepared to accept that their summer holiday is over. No sooner have they stepped off the airplane and they’re looking at property websites to turn their holiday home dreams into a reality.
The claim is supported by figures from our property website SQUiSiT, where visits from foreigners (mainly Britons, followed by German, French & Scandinavian people) to our overseas homes for sale section have increased 27 per cent during last months.
We found that European hot-spots close to Britain are the most popular holiday home destinations for Britons, with the most searched for location being Spain, followed by Portugal and France.

 

Buying Spain

The coast is the most demanding area. Property searches in the Spanish Mediterranean coast saw an uplift of 34 per cent.

Rules for this game

For example, make sure that the property you are interested in has been built legally as local authorities have been known to demolish homes built too near the shoreline or on unregistered rural land.

Anyone who is considering moving abroad can avoid making some of the most common mistakes by taking a few simple steps.

Step #1 – Real Estate Personal Shopper. We suggest instructing an independent surveyor, ideally one who is not locally based, to check the valuation and comparable properties in the area.

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We can supply that solicitor service. We always double check in full documents provided by our advertisers. However, a previous double check on the field is a must.

Step #2 – Visit the property by yourself. Never sign up for a property that you have not taken the time to visit. When you do visit, do so during the day and night. Talk to people who already live in the area to get a better understanding of what it is really like. And if you do not see the property in real life, what may have looked great in a sales brochure could end up being located in problematic or totally unsuitable areas. Your dream home may actually be situated next to a motorway, a local airfield or a rubbish dump.

We will visit the property with you in order to detect any trouble which will be probably transparent to you. Remember that building rules are becoming harder in Spain. Rural class lands are usually not suitable for this purpose. A visit to the local town hall is a key factor to know its build-ability.

Step #3 – Signing the Title. The most important piece of advice is to make sure you know what you are signing. The term “lost in translation” is one we are all familiar with, but when it comes to contracts for an overseas property, you could be at risk of experiencing its full impact.

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We will be at your side during the signature of the Title at the Notary Office. We will act as your official translator, also signing the Title with you.

Remember: Buying a property overseas can be one of the best decisions you ever make, but I would urge you to do your research and take the proper steps before taking the plunge.

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Clearing Tax

It is also important to consider the tax implications of owning a home overseas as this may ultimately decide whether you can afford to buy – and maintain – the investment.

Having a holiday home in the sun is many people’s dream, but buying abroad does bring some tax issues. You may need to complete foreign tax returns. Countries outside the UK usually tax income earned from letting a property out and may not have the same deduction rules for expenses that UK residents are used to.

There may be limits on what or how much can be claimed for tax purposes, especially by non-residents. Other countries also have different rules when properties are sold or given away. Some have exemptions after a certain period of ownership but others may not. You may need to complete foreign tax returns too.

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We will advise you on the best way to pay your taxes abroad. We are experts in property tax management.

Unfortunately, paying the foreign income and capital gains tax doesn’t necessarily satisfy the UK taxman. Overseas income need to be recalculated in sterling and under UK rules. Having said that, the tax man does typically acknowledge it when you foot an overseas tax bill.

If you are UK resident but don’t normally complete a UK tax return you may need to register with HMRC. Don’t assume they won’t find out – most countries tax authorities are talking to each other these days.

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