Experts advise overseas property buyers not to be deterred by Expat tax

Experts are advising the millions of British people planning to buy overseas property not to be deterred by Gordon Brown’s tax clampdown on Expats.

The advice follows a recent court ruling which changes the way Revenues & Customs calculates UK residency and new Mintel research that predicts 3% of British households (1.2 million) intend to buy a place in the sun.

Adrian Taylor, an overseas property expert and partner at national law firm Rowe Cohen explains: “A court ruling last week will see the taxman being more stringent in applying the 90 day rule when deeming UK residency. If an individual living outside the UK visits the country for more than 90 days in four years, they will be liable to pay UK tax on their worldwide income and gains.”

The number of people who own property abroad has increased by 45% (Mintel) in the last two years.

Dani Maxton, managing director of Morpheus Investments, which specialises in Southern Cypriot property development, comments: “Such rapid growth has been spurred by the lower tax rates offered in foreign countries and a booming overseas property market. Unsurprisingly, this has attracted the interest of the Chancellor, who is looking to plug a £3.5billion hole in public accounts by targeting overseas assets.”

Taylor adds: “People looking to buy a place in the sun, whether to let until they retire, as a place to holiday or as an investment, can still reap significant returns as long as they keep their tax returns up to date and seek expert advice.”

Globally renowned as a tax haven, tax free Dubai is attracting an increasing number of British property buyers. Sarah Yaseen, managing director of overseas property agent Palm of Dubai, comments: “Dubai is very popular with Expats as there is no capital gains or income tax. This can save people thousands of pounds and provide for a very comfortable retirement.

“However, the country also offers very attractive capital appreciation on properties and high rental returns. UK residents looking to invest there could realise the full financial rewards of this by electing their Dubai property as there principal private residence (PPR). Individuals can vary their PPR between their UK and second home and claim up to three years capital gains tax exemption and letting relief.”

Since the turn of the millennium, Southern Cyprus has attracted a growing number of British property investors, attracted by low tax rates and average yearly returns of 20% on property.

Maxton comments: “Southern Cypriot non-island residents can take advantage of the island’s many double tax treaties and tax sparing provisions. This can significantly increase return on property investments.”