Don’t Have Nightmares About Paying Tax On Property Abroad

tax on overseas property nightmaresUnless you are lucky enough to live in a country that doesn’t try to take all your hard-earned profits away from you in tax, it is probably that time of year when you wake up in a cold sweat having nightmares about your liabilities.

One of my grandfather’s favourite quotes was the one that said there are only two things certain in life, death and taxes but nothing about either is certain when you are living. He could be very pessimistic at times…

However he was right with both. You can never be certain how your country’s tax authorities will treat you in any given tax year and there are times where they may even decide to take a closer look at your affairs, and yes, sometimes they will even get it wrong sometimes.

If you have a good accountant, then this probably takes most of the weight off your shoulders. At least if they are keeping an eye on matters relating to tax on overseas property. Unfortunately it looks as if the governments in the UK and elsewhere are taking a much closer look at tax avoidance schemes.

Overseas property investors will be one of those groups they will keep an eye on.

Owning a property abroad would frankly be an easy way to avoid paying tax for some people in the past, with some either doing it deliberately or by accident. However, the rules are being squeezed to the point where you will need to prepare yourself, just in case you may not be following the rules.

If, for example, you invest in a property in Turkey you can take comfort in knowing that there is a double taxation agreement in place.

This means that if you are unfortunate enough to end up paying CGT in Turkey, then at least you can offset it against your UK liability, which may cancel it out altogether depending on your circumstances.

The situation is more complicated if you are unsure of your tax status. You could, for example, be a UK national living and working in Dubai and paying no tax, but liable for tax on the income from UK buy-to-let property.

One of the perks for UK investors who can avoid spending more than 90 days in their country is that they can enjoy their expat status and look to invest in countries where they can escape nasties like CGT.

It is possible to invest in property in Istanbul for example and avoid paying CGT after 5 years of ownership. Now that is something that will help you get a better night’s sleep.

If you are an investor who is worried about tax when investing in overseas property please click here to find out more in-depth information according to the country you decide to invest in

Have you ever been hit by tax on your overseas investments? Please leave your comments and advice below.

Kind regards

Loxley McKenzie
Managing Director

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