With Brexit uncertainty and Boris Johnson increasingly looking like the favourite to become the next prime minister, British citizens are concerned about the prospect of buying a property abroad. The EU is now hostile towards the Tory leadership campaign rhetoric which fails to confront the reality of the UK’s position in the negotiations, and opposes any further delay to Brexit. Amidst political and economic instability, the decision to buy your holiday home abroad can create considerable stress, especially when you have not set your finances in order.
There are obviously immense rewards, such as getting resident status or a passport, depending on your nationality or the country you are investing in. There will be carefree days in the sun and cool nights sipping your gin and tonic, as cicadas buzz in the distance. But, first, there will be bills to pay, bank accounts to open and funds to transfer from overseas, so being rational and foreseeing certain obstacles will only help you overcome hurdles easier and efficiently.
Knowing the law
Owning your own holiday home abroad can be a dream come true, and one that might possibly come with benefits such as a second citizenship, depending on the investment you make. But knowing early on the restrictions to rules and what comes with owning a specific property could potentially save you a lot of pain. It is always safe to get legal opinion on certain aspects of buying a property, including buying a house without title deeds, which can be a nightmare.
Getting a loan and property taxes
Dealing with your finances early on and finding out whether you can get a mortgage in another country is probably a good beginning, if you are trying to get things in order. As a Washington Post article clarifies, “Unless you have enough cash on hand to buy the house, you’ll be requesting a loan from a foreign bank — and it probably won’t be as easy as working with one back home.” For example, foreign banks might lend less of the total value, while there might be the financial burden of additional taxes. According to the Washington Post article, “Regardless of where you buy a home, you’ll likely be on the hook for extra taxes. Spain levies a 10 percent sales tax on real estate….Nonresidents buying in Italy have to pay about a 9 percent tax on the value of the land. On top of that, there can be ongoing property taxes.” Figuring all this out, could save you a lot of time and money.
Costs and Renting
From tax bills, utilities and various maintenance costs, you could be paying significant costs that can be offset by the decision to rent your home, which can be potentially profitable. But earning an income, will also be coupled with taxes, and you would need to know in which country you are paying those taxes.
Know and secure your rights
Depending on whichever country you are and the laws regarding owning property, many professionals specialising in tax compliance and consulting recommend that your property is listed as part of your estate and that you file a will in both countries of residence. According to certain countries, “if you don’t have a will [your home] could go to the closest relative you have in that country, which may not be where you intended it to go.”
When it comes to buying your future holiday home, you will be considering, for a large part, your financial situation and ways to navigate the complexities of a volatile market and transferring funds abroad. Universal Partners FX can tailor specific solutions to help you transfer large amounts of money internationally. From mitigating the effects of currency volatility, to providing access to the best exchange rates, UPFX can deliver the most optimal prices at the most opportune time. Find out what UPFX can offer you, by talking to one of their experts today.