1. Don’t Forget You Still Have UK Tax To Pay!
Arguably, this is more of a warning than a tip, but it is vital to remember that any UK resident individual buying property abroad is still exposed to UK tax on that property. This may include UK Income Tax on rental income, UK Capital Gains Tax on property sales and UK Inheritance Tax on any foreign properties you leave to your children.
The UK tax burden is often greater than any foreign tax liabilities, so it makes sense to undertake UK tax planning for your foreign property. Many of the same planning techniques that work well on UK property can be used equally on foreign property, although the overseas angle adds an extra dimension and brings both additional opportunities and additional pitfalls to be wary of.
2. Main Residence Relief for Foreign Holiday Homes
There is nothing in the UK tax legislation to say that a foreign holiday home cannot be a UK resident individual’s main residence for Capital Gains Tax purposes.
A holiday home can be treated as your main residence by making an election to that effect, generally within two years of buying the property.
The foreign property must be your own holiday home for at least part of the time but, by making the election, you will be able to exempt some or all of the capital gain on your foreign home from UK Capital Gains Tax.
Beware, however, that you’re only allowed one main residence and, if you’re married or in a civil partnership, you’re only allowed one between you, so electing to treat your holiday home as your main residence could backfire if you sell your main house back in the UK.
You can get the best of both worlds though, if you only elect to treat your foreign property as your main residence for a short period, say a week. How does this help? Well, since every main residence is also exempt for the last three years of ownership, that week buys you three years. In other words, you lose one week’s worth of exemption on your main house but gain three years (and a week) of exemption on your foreign holiday home.
Few of us invest the time and effort into researching and securing the best deal for a mortgage to purchase our home.
Almost every state in US calls for the need of an authentic insurance coverage, while you intend to drive the vehicle, whether it is a car, or any SUV. The general aspects of Insurance Coverage include:
If finances had a copyright, we would have bought it by now. But it is hardly sold anywhere near the place we live. So, when we decide to take a mortgage it becomes highly perplexing for it is something you are not used to. Taking out a mortgage is not like an everyday errand. Mortgage in the simplest terms mean long-term loan used to finance the purchase of real estate. As the borrower, or mortgagor, you repay the lender, or mortgagee, the loan principal plus interest, gradually building your equity in the property. In a mortgage, you can use your property but not the title of it. When you pay the mortgage, you own the property.
Active Income – Income for which services have been performed. This includes wages, tips, salaries, commissions and income from businesses in which there is material participation. Active income is income from any of the following: