Here at Nolan James, more and more clients are considering buying a second home either within the UK or abroad, maybe as an investment or as a second or holiday home.

If you think you might like to do the same, read on for some free advice...

Ownership

You need to consider the legal ownership of the property. You could own it in your own name, jointly with your husband or wife, through a limited company or perhaps jointly with business partners or friends.

Ownership will affect any capital tax liability due when the property is sold, and the tax due on any rental income received.

Local Tax Rules

If you are buying a property abroad, you must consider the foreign tax rules as they may differ from UK tax rules.

You need to understand the laws that apply in whichever country you are buying a property, such as sales taxes on the purchase.

Running Costs

Maintenance costs for the property (such as the letting agent's fees, electricity and gas) are tax-deductible.

You might also get tax relief for repairs and renewals to the property, though the rules are complex and each case would be judged on its merits. The good news is that you can normally use interest paid on loans to buy a property to reduce the taxable rental income.

Rental Income

If you are a UK resident, any rental income you get from letting out a property, in this country or abroad, will be subject to UK tax.

This includes rental income you receive from family members and friends. Any rental income you receive from a property abroad might also be subject to tax in that country, as well as here in the UK, unless there is a tax treaty between that country and the UK that prevents the income from being taxed twice.

A word or two of caution

When buying a foreign property you must take the advice of legal and tax professionals, both in the UK and the country where the property is located. A small extra cost now could save significant amounts later.

Still keen? Good! Nolan James will be pleased to advise you on the tax implications of buying your second or investment property. Give us a bell!