If you’re thinking of buying a property abroad, don’t forget that you could have to pay tax in two different countries.

For example, if you rent your property as a holiday home, then you’re liable to pay UK income tax on the proceeds. If you sell the house, you could be liable for UK capital gains tax. When you die, the property will also be included as part of your estate for inheritance tax purposes. But if your property is in, say, France, then the French tax authorities may also expect you to pay tax on any income or capital gains. There are also local taxes to take into account. In France, for example, you would be liable for French wealth tax at 3% of the market value per year as well as a real estate transfer tax at a rate of nearly 5% when buying the property as well as local government rates.

The good news is that the UK has entered into double tax agreements with many of the countries where you may be thinking of buying a house. This means you are able to offset any tax you pay in France, for example, against the tax due in the UK.

As always, it’s best to seek expert legal advice as early as possible. Our solicitors can help. Through LawNet our firm is also a member of the European lawyers network, Eurojuris, so we are ideally placed to provide legal advice on pan-European issues.