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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.”


Full story at the Times Online

Second home buyers seeking a place in the sun have helped to send prices in Spanish hot spots soaring over the past five years. There may be more pain than gain in Spanish property. Many have made a packet from newly-built flats in popular coastal areas where prices have been rising by between 10 per cent and 20 per cent a year.

But there are now signs that many of the latest batch of investors are about to get their fingers burned. Prices in some high-density areas are falling and second-home buyers are turning increasingly to the cheaper markets in eastern Europe.

Peter Robinson of Homes Overseas, says: “Our best guesstimate is that 65,000 Britons buy abroad each year. Two years ago, 55 per cent of those wanted to buy in Spain but, by the end of last year, this percentage dropped to 43 per cent, as people turned to Turkey, Croatia, Bulgaria, Slovenia and Cyprus.”

Spain has more than one type of property market. Prices in inland areas remain fairly stable as they do not tend to attract British, German or Swedish buyers. In other areas, where the Spanish are competing with overseas buyers, prices can be on a par with London but, as yet, markets have been holding up well.

Full story at the Telegraph

Statistics published by the Spanish Housing Ministry have shown that average house prices have continued to rise over the third quarter of 2004, although at a slightly slower rate than during the previous quarter. Research has shown that prices of newer residences have increased at a slower rate than those of older houses.

New houses increased by 16.72% over the year ending in September, while houses from 1-10 years old increased by 17.83%. The biggest annual increase was seen in 11-20 year old house, which rose by 18.53% over the previous year. However, the rate of increase fluctuated according to area, Some areas, such as Asturias and Navarra, recording a price fall, whereas price rises in other areas were as high as 29.6% in Valencia. Price increases in Malaga province were nearly as high, averaging 28.82%. Nevertheless, the Housing Ministry predicts much lower increases during 2005; they think prices rises will moderate to no more than 10%.

Meanwhile, the Association of Promoters and Constructors (APCE) has announced that there has been a significant drop in house starts in 2004 compared to the previous year, when a record 636,000 house starts were recorded. 2004’s figure is 450,000, and the APCE predicted that this number of house starts would also hold for the following two years.

Full story at 123 Property News

Many of the illegal or unlicenced residential properties in Cartama may soon be legalised, according to a spokesman for the municipal authorities of the town, which is situated in the interior of Malaga province.

Over the last 20 years thousands of properties that do not conform strictly to the existing PGOU have been built in the town and surroundings. A spokesman for the council authorities said that they were studying ways of integrating these properties into the new PGOU, which is in the process of being drawn up. The conclusions reached will be presented to the authorities in February.

Jose Garrido, the mayor of Cartama, stated that many residents of the affected areas had petitioned the council to legalise their properties by integrating them into the new plans. However, once the plans are approved, it will probably take more than a year for them to be ruled on by the Junta de Andalucia.

Full story at 123 Property News