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Tax bonus for overseas property buyers

Wednesday, 11 April 2007 12:00 AM

Overseas property buyers who only use their overseas home for private use will benefit from a tax bonus from 2008, an overseas property company reports.

Analysis by Assetz of last month's Budget reveals the government is set to scrap UK tax on property bought through a company.

"Holiday home owners often purchase property abroad through a company in order to avoid local inheritance laws, which makes them a director of the company owning shares in the home, which they can pass on as they wish upon death," Assetz explained.

"However, they have been subject to an annual tax in the UK as the property has been classed until now as a 'benefit-in-kind'.

"This tax is based on the rental income that would have been achieved if the property was let at the local market rate. This charge is being scrapped from 2008, resulting in thousands of pounds of savings for the average international property owner who bought through a company. They will also be able to claim tax back retrospectively."

Martin Sadler, Assetz International sales manager added: "In France for example, many British people buy property through an SCI (Société Civile Immobiliere), which enables them to avoid French inheritance laws forcing the property to be sold upon death and divided between offspring. In some eastern European destinations, it is only possible to buy property though a company if you are a non-resident.

"Individuals who have already bought could be in line to receive considerable payouts from the Inland Revenue next year, for any tax paid previously. The idea of buying homes overseas through a company will become even more popular following this u-turn."

Overseas property investors should note they will still be liable for tax on rental income if the property is rented out on the open market.

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