Your premise is that BTL abroad is somehow a better investment than in the UK. But what makes you think that this is the case? You're taxed on profits equally whether they come from the UK or abroad. Managing property abroad is more difficult, and transferring it to/from the UK itself costs a premium. I'm not saying don't consider it, just that you need to have a clear picture of why you favour abroad over the UK, and what you expect to gain in comparison to other forms of investment. Lots of people may be investing abroad, but this is often part of a much wider/bigger portfolio and/or because they want a holiday home as well.
Clearly the case for B2L abroad really only make sense where the price point is comparitevly low compared to the UK.
At the same time yields can only be maximized where property is fully occupied through the year.
Berlin and other East German cities are proving popular with Brits, both private individuals and many City institutions. The reason is that prices in Belin can be 80% cheaper than London, so investors get a 5%+ yield and a lot of roomfor capital growth.
In my experience you need British infrastruture to do well abroad, otherwise you face a wall of complex foreign documents. The Brit agents are active in E Germany and also Estonia - another attractive buy for many Brits.
As someone involved in the overseas property industry, my advice to you would be to look outside of Dubai in order maximise your capital appreciation and your buying power, (Depending on your budget). Also look beyond the long term letting market to short term letting. The UAE is increasingly attracting more & more tourists each year, coming from the premium end of the socio-economic group.
My Recommendations would be investing in Ras Al Khaimah an up an coming emirate, with access to an airport and a brand new airline which was launched recently. Properties in the Al Hamra resort are about 200mtr (5min walk)from a beach with a new 7 star hotel being constructed within the same location, (this means good location potential). Apartments in Al Hamra will cost you about AED415,000 for a Sea view studio or AED460,000 for a golf course and lagoon view.
Since the Al Hamra is already an established resort doing short term lettings via Al Hamras own property management company should pick you up about 15-16% first year profits. By the way you can open up a tax free offshore bank account in Dubai or an offshore company with headquarters in one of the UAE freezones, thus your income remains TAX free providing you dont transfer it to the UK.
Wrong. You are always taxed on all profits from overseas properties, whatever you do with the income. Holding it in a foreign account which is untaxed locally in no way exempts you from paying UK tax. The only way round this is to be domiciled abroad and to spend less than a certain number of days in the UK (in total, not continuously).
Originally posted by msej449: Wrong. You are always taxed on all profits from overseas properties, whatever you do with the income. Holding it in a foreign account which is untaxed locally in no way exempts you from paying UK tax. The only way round this is to be domiciled abroad and to spend less than a certain number of days in the UK (in total, not continuously).
MS, it is very very common for Brits not to declare the foriegn property income. I think you will find they simply keep the money away from the UK, although they do bring some back in using cash, travellers cheques, posted from abroad to safety deposit boxes etc
Well, all I'm saying is that failure to declare foreign income is illegal. It's up to you if you're prepared to take the risk. Other people mat get away with it, but you can be sure that HMRC are on the lookout for this. If you get caught, then be prepared to be taken to the cleaners. \It's up to you.
Originally posted by Thorr: MS, it is very very common for Brits not to declare the foriegn property income. I think you will find they simply keep the money away from the UK, although they do bring some back in using cash, travellers cheques, posted from abroad to safety deposit boxes etc
Alternatively you could take to robbing banks or smuggling drugs.....providing you don't declare your activities (and don't get caught) it's very lucrative and "Tax Free".
BTL - sounds good. Not a great fan of that sort of gamble myself. Horses for courses I suppose. Also tax on money earned from properties abroad - up to you of course but is it really worth all the effort, time and risk to attempt to dupe the taxman of the two countries involved. Personally, I don't want to have break out in a cold sweat anytime I receive a brown envelope and have to hide behind the curtains hoping to be able to slip out the back door when someone in a suit knocks on my door. I've stayed transparent, scrupulously correct in my returns and never suffered from a sleepless night. For anyone just starting in this game, make your own way but money earned while you are in a prison cell doesn't have the same ring to money arriving and you're free to enjoy it.
Originally posted by Vonreisa: BTL - sounds good. Not a great fan of that sort of gamble myself. Horses for courses I suppose. Also tax on money earned from properties abroad - up to you of course but is it really worth all the effort, time and risk to attempt to dupe the taxman of the two countries involved. Personally, I don't want to have break out in a cold sweat anytime I receive a brown envelope and have to hide behind the curtains hoping to be able to slip out the back door when someone in a suit knocks on my door. I've stayed transparent, scrupulously correct in my returns and never suffered from a sleepless night. For anyone just starting in this game, make your own way but money earned while you are in a prison cell doesn't have the same ring to money arriving and you're free to enjoy it.
Not duping 2 countries, the host country has low or no Tax so no avoiding to be done there.
Why should hardworking people take immense personal risks / sleepless nights putting precious money into foreign property (that could dissapear if developer goes bust) only to then find he has to hand over 40% to Gordon Brown!!!!?
Will Gordon Brown bail them out if the developer goes bust?
You know most UK B2L ers I know dont declare thier income from UK property let alone foreign!!
Prison - a short stay in anopen prison will do you good, just think of it as a de - tox and excercise break
Post the visiting hours and I promise I'll visit you, with photos of your properties to remind you it's all worth it. Hope they don't make you share a cell with a psychopathic, sexual predator with Terets, double incontinence or genital warts. I'll face the lesser of two evils (though admittedly by the merest of margins)and share a house with her who must and will be obeyed.
When dealing with third party/middlemen/sales agents or direct with the Developer It’s Caveat Emptor
A few basic rules to remember when investing in property abroad:-
1. At least take the same level of care and caution when buying property in a foreign country as you would in the UK (i.e. employ a subject mater expert lawyer to advise/act on your behalf, as opposed to one recommended by a vested interest (VI), or rely on a commissioned sales person).
2. Take everything people with a VI’s (i.e. developer/sales agents or a lawyer recommended by them) say with a large pinch of salt and test their statements against factual/market reality, do your own due diligence (DD).
3. If the price/deal seems too good to be true it usually is. In fact focus on ‘value’ and the opportunity for it to increase, be added to and realised. Don’t fall into the common trap of comparing a property investment abroad with UK prices, as it is meaningless in assessing ‘value’.
4. Always take into account the cost of buying and selling when doing your DD. In places like Spain and the US these can be high and erode your profit or increase your loss. Also gain a detailed/realistic budget of the running costs of the property and taxes you will incur as an absentee owner. Investment properties abroad always cost more to own/run and generate lower income than budgeted for.
5. Never pay over your deposit unless you have a bona fide Bank Guarantee or it’s held in escrow. To pay the deposit into the developers/sales agents cash flow is to invite disaster, let other mugs do this and move on.
6. Take time to research what drives the market locally (both historically and currently) e.g. Take Florida as an example: Average annual property price rises in Florida historically being 3 to 4 % per annum and with 2004/05 being circa 15% and 27% respectively, and with interest rates being raised every month it was ‘buyer beware time’. Remember fundamentals need to underpin the market and locals/local economics can’t afford the prices wet back Brits seem willing to pay. There won’t always be a 'greater fool' to off load to.
7. Never believe that your property has gone up just because the developer is charging new buyers ‘fresh off the plane’ a higher price than you paid six months or so earlier. Resale’s abroad (especially where there’s overdevelopment and/or, a none existent/weak resale market), do not command ‘new property premiums’ and can take years to sell if incorrectly priced. Bulgaria is a classic example of where Brits have paid £50k for 2 bed apartments and think they’ve made £10k profit because the developer is selling the next phase at £60k, only to find they can’t even find a resale buyer at their original purchases price. Many also made the mistake of taking the developers advice to buy two units, one to keep and one to sell at a profit!!
7. Buying a property abroad is not a ‘passive’ investment; you’re starting a business the main asset of which in hundreds or in Florida’s/Caribbean’s case thousands of miles away.
