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Top Overseas Tax Tips

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Here are the best tax tips for UK residents who are interested in buying homes abroad but are not sure what tax they have to pay.

The first thing to remember is that you still have to pay UK tax on your property, no matter where you choose to buy in the world. In some cases UK tax can be more burdensome than the tax of the country where your foreign property is housed.

It is important to know that your foreign home can be classed as the main home in relation to the UK tax you have to pay. Although you would still have to accept that your foreign home would be a holiday home for a short period of time, it can still save you money to flip your house.

An advantage about living abroad is that you can travel on the Treasury's expense, particularly if you are renting out foreign property and if you can retrieve VAT with your leaseback, i.e. through owning the property but leasing it out as a business to claim VAT back.

One of the most important things you can do before buying property in a foreign country is to understand the tax system of that country. It is also beneficial to try wherever possible to claim back double tax relief.

The two most important pieces of information that all foreign property owners need to adhere to are to avoid tax evasion and expect the unexpected. Being guilty of tax avoidance can mean something as simple as ignoring correspondence form a country's tax inspectorate body simply because it is written in that country's language. Expecting the unexpected meanwhile covers stuff like different tax year cycles, the issue of property and succession laws as well as the problem with different tax rates – what you think you should be paying compared to what you actually are.

By taking all of these tips in you should have an idea of what the overseas property tax market is like and give you an idea of what you are likely to have to pay.

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