Thinking of buying abroad? Before you sign on the dotted line, it’s essential to understand the tax responsibilities that come with property ownership. Getting it right from the start will protect your investment, avoid surprises and ensure nothing gets in the way of enjoying your new life abroad.
Imagine the morning light flooding through the shutters of your home in Spain or the gentle buzz of a French market drifting across your Italian terrace. You’ve done it – you’ve made the dream of owning a home abroad a reality. But now comes the less glamorous (but essential) part: making sure you’re fully on top of the taxes involved.
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Contents
- Why tax planning matters
- Understanding property taxes by country
- Residency and double taxation
- Rental income and holiday lets
- Inheritance and capital gains
- Get answers at the Virtual Property Event
Why tax planning matters
Owning a property overseas affects your financial life in more ways than one. From the moment you purchase, you may become liable for local property taxes, annual income declarations or inheritance charges. Without a clear tax strategy, you could face unexpected bills or compliance issues that impact your home or your estate.
Understanding property taxes by country
Tax laws differ significantly depending on where you buy. Here’s a quick example of some of the taxes to expect in a few popular destinations:
- Spain: annual property tax (IBI), non-resident income tax and a potential wealth tax if your assets exceed thresholds (more info).
- France: property ownership involves taxe foncière and taxe d’habitation (for second homes), plus capital gains on sales (more info)
- Portugal: IMI is the annual municipal tax and if you rent your property, you must register it and pay income tax (more info).
- Greece: ENFIA is the annual property tax and capital gains apply on sales unless exemptions are met (more info).
- Italy: second-home owners pay IMU and income from holiday lets must be declared locally and possibly in the UK too (more info).
The rules for each country can change regularly and often include exemptions or different rates depending on whether you are a resident or non-resident. That’s why it’s crucial to get local advice.
Get free one-on-one tax advice at our Virtual Event in October
Residency and double taxation
One common concern for buyers is paying tax twice – once in the country you own property in and again in the UK. Fortunately, the UK has double taxation agreements with many European countries, which means you’re not taxed twice on the same income or gain. However, this doesn’t mean you avoid tax entirely – you just offset what’s already been paid abroad.
Residency is another factor. If you spend more than 183 days a year in one country, you may become tax resident there – and that could trigger a requirement to declare your global income.
Rental income and holiday lets
If you plan to rent out your overseas home – even just for a few weeks a year – you may need to register as a landlord locally and pay tax on the income. That income may also need to be declared on your UK self-assessment return.
Rental income is treated differently across borders. For example, in France, expenses like insurance and maintenance can be offset. In Portugal, you may need to register your property as “Alojamento Local” and submit regular reports to the tax office. And in Greece, short-term lets through platforms like Airbnb must be reported, with income taxed at progressive rates.
Inheritance and capital gains
Planning ahead for what happens to your overseas home after your death is essential. Inheritance laws and taxes vary – some countries, like France and Spain, may not automatically recognise UK wills or inheritance intentions. Local laws (forced heirship rules) could override your plans.
On sale, you may be liable for capital gains tax both in the country where your property is located and in the UK. Again, this is where the double taxation agreement comes into play. It’s wise to keep detailed records of purchase costs, renovations and fees to help reduce your liability when you sell.
Get answers at the Virtual Property Event
It’s no surprise that many buyers feel overwhelmed by the tax side of overseas ownership. The good news is, you don’t have to figure it all out alone. At the Your Overseas Home Virtual Event, you can book one-on-one consultations with local tax experts from your chosen country and attend webinars dedicated to finances and taxes.
This is your chance to ask the questions that matter to you, directly to the experts who know the systems inside out. Whether you’re still planning or already own, you’ll come away with clarity, confidence and a plan tailored to your goals.
Final thoughts
Owning property abroad is a dream for many – and when done right, it can be one of life’s best decisions. But behind the dream lies the detail and tax is a key part of the story. With expert guidance and early planning, you can enjoy all the rewards of ownership, without the worry. Start by understanding your obligations and let the experts help you find the best way forward.
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