YOUR PORTFOLIO
/ A PLACE IN THE SUN /
SUN TRAP
Cherry Reynard says anyone thinking of spending their
retirement years abroad could be in for a nasty surprise
if they don’t do their research
I
T IS THE LATER-
LIFE IDYLL: A
PROPERTY
ABROAD, blending
with the locals,
learning a new language, sampling
the local cuisine. However,
experience suggests it doesn’t
always work like that and many
people end up with unexpected tax
bills, shouting in English to idle
builders, or become victims of
huge currency fluctuations. While
many of those who take the plunge
don’t regret the decision, few
would consider it the most
efficient use of capital. Is there a
way to make foreign property
work as an investment as well as a
lifestyle choice?
THE EASY BIT
In countries with a well-developed
legal system, buying the house
is usually the easy bit. Different
countries have different systems:
in France, for example, the deal is
binding when the deposit is paid
and the “compromise de vente”
signed. Back out and the deposit
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is lost. However, most developed
countries have systems that are
recognisable to someone who has
bought a house in the UK.
In each case, an independent
solicitor is vital. Adrian Kidd,
lifestyle financial planner
at Radcliffe & Newlands,
cautions against using solicitors
recommended by a project manager
or agent. He says: “A lot of agents will
inflate the prices between the buyer
and seller. It is easy to go for the first
choice because you believe it’s your
only option.”
English-speaking solicitors who
specialise in domestic law are
easy to find. There are also English
lawyers specialising in international
transactions registered with the Law
Society. All solicitors must have
professional indemnity insurance.
FOREIGN EQUIVALENTS
“taxe d’habitation” and “taxe
foncière” in France or impuesto
sobre bienes inmuebles
(property ownership tax) in
Spain. Many other countries
also have a wealth tax. It
isn’t due on worldwide
income and assets as long
as you aren’t resident in
the country, but if your
foreign property is valuable
enough, there may be a
liability.
If the property is rented out as
a holiday let, this can also attract
foreign tax liabilities. These can be
complex, so again it is worth seeking
the help of a solicitor. As with
the UK system, there will
be deductions for
expenses, such
as letting
fees and
A solicitor may also advise on tax
implications of a purchase abroad.
At the start of the transaction, there
is the foreign equivalent of stamp
duty. There will also be ongoing
council tax equivalents, such as
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