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Tax on overseas property scrapped from 2008

British people with overseas private properties will benefit from a new tax bonus, says Assetz.

The firm says holiday homeowners often purchase property abroad through a company in order to avoid local inheritance laws, which makes them a director of the company owning shares in the home, which they can pass on upon death.

But they have been subject to an annual tax in the UK as the property has been classed until now as a benefit-in-kind. This tax is based on the rental income that would have been achieved if the property was let at the local market rate.

This charge is being scrapped from 2008, resulting in thousands of pounds of savings for the average international property owner who bought through a company. They will also be able to claim tax back retrospectively.

Assetz International sales manager Martin Sadler says the latest Government U-turn is good news for property investors and holiday homeowners overseas, who have until now been penalised by the UK tax system, even though buying through a company is often simply the only way to buy abroad.

He says: “In France for example, many British people buy property through an SCI, which enables them to avoid French inheritance laws forcing the property to be sold upon death and divided between offspring. In some Eastern European destinations, it is only possible to buy property though a company if you are a non-resident.

“Individuals who have already bought could be in line to receive considerable payouts from the Inland Revenue next year, for any tax paid previously. The idea of buying homes overseas through a company will become even more popular following this U-turn.”

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