Post by robert on Mar 28, 2004 19:46:14 GMT 1
People who consider buying property in Croatia through the company route should read this Sunday Times article:
www.timesonline.co.uk/newspaper/0,,176-1053412,00.html
From the article:
Tax blow for overseas property
BRITONS who own a property overseas could soon be hit by a punitive tax charge.
Accountants are worried that people who have bought a holiday home abroad through a company could be landed with a bill of thousands of pounds a year.
The charge would be based on an assumed value for the property — the more it is worth the more you would pay. The Revenue would assume a rateable value for the first £75,000. On any excess it would charge what is known as the “interest rate for beneficial loans”, currently 5%.
Imagine you have a £100,000 property in Spain. The Revenue might estimate that the first £75,000 has a rateable value of £2,000. You would then add 5% of the extra £25,000 — £1,250 — to get a taxable benefit of £3,250. A higher-rate taxpayer would therefore face a bill of £1,300.
A lack of guidance from the Revenue is causing uncertainty, and accountants are wary of recommending a company structure for purchases of foreign properties because they fear that there will be a crackdown.
I always advise people to weigh carefully whether to buy as private individuals or though a company. The possibility of UK tax liability for the later route should now also be considered. There is a simple and safe way for British, Irish and USA investors to buy as private buyers and people should not be pressured into forming companies to buy Croatian property, unless this affords other benefits that outweigh possible shortfalls.
Robert
www.timesonline.co.uk/newspaper/0,,176-1053412,00.html
From the article:
Tax blow for overseas property
BRITONS who own a property overseas could soon be hit by a punitive tax charge.
Accountants are worried that people who have bought a holiday home abroad through a company could be landed with a bill of thousands of pounds a year.
The charge would be based on an assumed value for the property — the more it is worth the more you would pay. The Revenue would assume a rateable value for the first £75,000. On any excess it would charge what is known as the “interest rate for beneficial loans”, currently 5%.
Imagine you have a £100,000 property in Spain. The Revenue might estimate that the first £75,000 has a rateable value of £2,000. You would then add 5% of the extra £25,000 — £1,250 — to get a taxable benefit of £3,250. A higher-rate taxpayer would therefore face a bill of £1,300.
A lack of guidance from the Revenue is causing uncertainty, and accountants are wary of recommending a company structure for purchases of foreign properties because they fear that there will be a crackdown.
I always advise people to weigh carefully whether to buy as private individuals or though a company. The possibility of UK tax liability for the later route should now also be considered. There is a simple and safe way for British, Irish and USA investors to buy as private buyers and people should not be pressured into forming companies to buy Croatian property, unless this affords other benefits that outweigh possible shortfalls.
Robert
