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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 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 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
“ 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
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