Whilst buying a property abroad may seem a straightforward transaction, there are several important points to
consider:
Income Tax
UK residents are liable to UK income tax on all their worldwide income, therefore, if they decide to rent their
holiday home it will be subject to income tax in the UK. The income may also be taxable in the foreign country,
however, a double taxation treaty may exist.
Many countries such as Spain also have local taxes to remit, and advice should be sought at the time the
property is purchased.
Capital Gains Tax
As is the position with a second home in the UK, where it is not considered the taxpayers main residence,
capital gains tax will be payable on disposal of the foreign property, should it be sold for a sum greater than the
purchase price.
Inheritance Tax
Where an individual is domiciled in the UK, their worldwide assets will be subject to IHT on death and their
estate will therefore include the foreign property. It again is important to take advice in the relevant country to
ensure the local IHT position is considered.
As always please do not hesitate to contact your usual Drummond Laurie contact to discuss further or contact
us at hello@drummondlaurie.co.uk