3 Hidden Dangers Ready To Sink Your Holiday Buy-To-Let Dreams

holiday homes abroadDo you sometimes get the feeling everyone is ganging up on you? All you want is to invest in a nice holiday home abroad and then you are hit with something you hadn’t bargained for. Let’s start with Spain shall we.

The Spanish authorities seem to be on a collision course with overseas property investors.

Instead of making it easier for investors to buy up all that excess housing stock, they have decided to make it harder. What have they done?

Legislation due to come out as early as this summer will mean that people who own a second home in Spain and want to rent it to cover costs will no longer have the right to do so.

That is unless they have authorisation from the local authority and a licence granted by the regional government.

The above would not sound quite as bad if it wasn’t for the competing interests of local tourist hotels in those regions who also want to accommodate tourists.

As if this wasn’t bad enough we have a HMRC clampdown on UK resident property investors.

The deadline for people to declare tax on their holiday home investments – or gifts, is next month (August).

Those investors who fail to declare earnings from rental income or profits from the sale of their rental properties will suffer penalties which will get progressively worse if the 6th September 2013  payment deadline is missed.

…and finally if you happen to be using an agent  to source your overseas investment property, beware of so-called finders’ fees.

These are the fees that can run into several thousand pounds which investors pay to have their agent find property for them.

Understandably this will wipe out much if not all of your rental profit in the first year.

The mystery is why agents need to charge this fee in the first place when they will already have the property on their books.

If you are dreaming of a holiday home overseas, it is worth considering a company that knows all about these potential pitfalls.

Colordarcy does not charge a finders’ fee and carefully monitors property markets all over the world to make sure investors are getting good value for money and – just as important – an appreciating asset free of red tape.

Have you ever been caught out by red tape when investing in property? I would like to hear your thoughts.

 

Kind regards

Loxley McKenzie
Managing Director

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