Tax warning on overseas holiday homes
February 16th, 2005
The Inland Revenue is targeting people who buy property abroad through a company. Many people who own properties overseas could be hit by unexpected tax bills running into thousands of pounds.
The Inland Revenue is threatening to crack down on Britons who set up companies to buy homes in countries such as France, Spain and Portugal. The strategy is often used to sidestep local taxes and inheritance laws, but could land homeowners with a painful UK tax bill.
Property companies are meanwhile encouraging people to buy abroad with claims that overseas property will be “tax-free” from April next year, when you will be able to hold it within your pension fund. But while you will then avoid UK tax, you could still be subject to tax in the foreign country.
Peter Esders of John Howell & Co, a law firm, said: “More and more people are buying abroad, especially as returns from buy-to-let in the UK are becoming lacklustre. But not enough people consider the tax implications, which can be extremely complex.”