What Will Be A Property Hotspot For 2008???

[mickthepropertyguru]

So does this mean as self-employed i pay no capital gains tax on property in Egypt? I ma in Ireland

Well in egypt there is no CGT at the moment. So when you sell your property you would'nt have to pay anything in Egypt but expected to declare any profit to your Irish government and pay 20% tax on the profit.

Capital Gain Tax in Ireland is 20%. Any income brought into Ireland from abroad is charged CGT at 20%. Dual tax treaties are there so what you pay in the country where you sell you wont have to pay again in the country you reside in. they are deducted from each other and the remainder you have to pay in the country you reside in. If there is no tax treaties with the country of your investment and the country you reside in then you have to pay the full CGT in each country.

But as an example if Egypt changes its CGT and lets say put it at 10%,
because Ireland has no Dual Taxation with Egypt you would have to pay 10% in Egypt and a futher 20% in Irleand. (30% in total)
But if Ireland had dual taxation with Egypt then the 10% you would pay in Egypt would be deducted from the CGT in Ireland and you would only pay 10% here in Ireland instead of the full whack.

Pressure needs to be put on Bertie to reform the Irish Dual Taxation system because any country that Ireland doesnt have a Tax treaty with leads to the investor paying the full CGT in each country.
Being self employed has no effectt on CGT Tax i believe. But as long as Egypt dosent raise the CGT then it doesnt matter but you will have to pay 20% in Ireland regardless.

 

[Sunnyshores]

Mick - so if Egypt did have CGT and a dual tax agreement you would have to fill the Egyptian tax forms in and then deduct this amount from the Irish bill?

 

[mickthepropertyguru]

Mick - so if Egypt did have CGT and a dual tax agreement you would have to fill the Egyptian tax forms in and then deduct this amount from the Irish bill?

if Egypt or any country did have CGT of 10% then you would have to pay 10% of your profit to that country regardless and if Ireland did have a treaty than the % you have payed would be taken away from Irelands CGT of 20% so the remainder you would pay in Ireland. It act as credit if you know what i mean.

But unfortunatly Ireland has only 40 or so treaties so if any contry Ireland has no agreement with raises CGT from 0% than you will pay full amount in each country.
The Uk are very lucky as they have so may Tax agreements ,most other counties have CGT less than 18% so the most and the least anybody in the UK will pay is 18% as i believe the CGT in the UK has been chaged from around 25% to 18%.

So if you invest in any country Ireland has no Dual Tax agreement and you sell, then you will pay the CGT in that country and the the full 20% in Ireland.
If you invest in a country Ireland has a Dual Tax agreement with and sell then then Lets say XXXX at 12% CGT then the 12 % you have payed in XXXX wil be taken away from 20% and you will only pay 8 % in Ireland.
Dual Tax treaties pertect the buyer.
Even if you invest in a country that has no CGT i believe you will still pay 20% in Ireland.

 

[Sunnyshores]

Mick

Basincally then wherever you invest in the world, if it has CGT you need to fill a tax form in, in that country. And then either claim back that amount off your own country's CGT form, if there is a double tax agreement.

Presumably there is the same sort of form filling and crediting scenario with income tax from rentals?

Whilst I'm happy to fill in my own UK tax forms, what about overseas ones (I have soon to be completed properties in Morocco, Turkey, Brazil, USA),appart from different tax rules in most cases they will be in a foreign language.

I suppose I'd have to find an English speaking accountant in those countries? Or does anyone know of an English company that can do tax returns overseas?

 

[mickthepropertyguru]

ya i believe they will give you a certificate stating you payed X % there so you can send this to The Irish Tax office and you will pay less CGT in Ireland as long as they have a Dual Tax treaty with that county.
Ya most property companies will leave it all to you, stating that they are not Tax specialists and the Tax is your own business.
The best thing you could do is speak to your laywer in each country and they should have no problem in getting you the appropriate forms and information.
But you wont have to worry about CGT until you are selling.

 

[Jeremy Sturgess]

CGT issues

If you are uk resident (or resident in most places that require you to report your worldwide income or gains) I believe the way it works is as follows. You pay CGT in the jurisdiction where the asset is at whatever the local rate is (Egypt has no CGT but there is a 2.5% wealth tax on the sale proceeds) and then you are supposed to report the gain achieved on your uk tax return and will be taxed at 18% (assuming Darlings CGT plans for post Apr 5 2008 dont change in his budget today) with a credit being given against your tax payable in the uk to the extent that you have already paid some CGT in the other jurisdiction where the asset was held. This is what double taxation agreements are for - to stop you paying tax twice- but if you are uk resident you are still liable for CGT on any asset you sell at the uk rate. So if the local tax rate for CGT is 16% (as in france) you would pay 16% to french tax man and the difference between 18% and 16% or 2% to the uk tax man.

where i think the confusion arises is that because there is no capital gains tax in some jurisdictins like Egypt or Dubai, uk residents think they dont have to pay tax on their untaxed overseas gains in the UK. This is not the case although I expect many unwise uk resident people investing in places like Egypt or Dubai will take the risk of not reporting their overseas gains to the uk tax man and thus pay no tax - until they are caught out many years later by an investigation or a "woman spurned". The risk of the Egyptian tax authorities cooperating with uk tax man and sharing information (as happens throughout europe now) is probably pretty low particularly with the language barrier but cannot be ruled out in future as computers improve and all governments seek to protect their tax base

Hope this helps. It is only my opinion and Im not an accountant and you should seek professional advice if you have any concerns

as I understand it you pay CGT on property (or any other profits) that you hold anywhere in the world. An individual who is Self employed, unemployed, employed etc makes no difference to CGT.

The amount you pay depends on what your home country ie Ireland charges.

What I dont understand is : where there is a double tax agreement do only declare it in Ireland, or do you need to declare it in the overseas country too and then deduct this overseas amount from the Irish amount due.

I know this subject really needs an experts advice, but I just wondered about the procedure.

 

[Sunnyshores]

Income tax still needs to be declared in overseas countries - in some places even if you didnt earn anything from your property.

I know this is all pretty new as most people were sticking to Europe and buying off-plan, but there must be some Uk tax/accountancy company dealing with multi-country tax affairs.

 

[mickthepropertyguru]

Ya this is true but the information isn't very hard to find out. Just visit the countries tax revenue site and it may take some reading but you will find all your answers. The country you reside in and the country you have invested in.
Other important issues are Inheritance tax and procedure and Wealth Tax (usually rare).

 

[Sunnyshores]

I've started a new thread "Tax issues when property investing" so we dont hijack this hotspots one! http://www.totallyproperty.com/new-emerging-property-markets/6473-tax-issues-when-property-investing.html#post37164

 

[Gashead]

Definitely Montenegro, since 2006 - 2007 the prices are abnormally big for this small but beautiful country, for example 1 m2 in Montenegro is more then Palma De Majorca, (I know because I work there too).
Why? Because first buyers from Russia and Ireland mostly is the ones who rises the prices (not the local people as you might think),because they knowed that Montenegro will be the most waned real estate market in next few years. You don`t need the better proof from this: if somebody (and this year was lots of them) is willing to pay 5000 euros per 1m2 of the coastal residence in this small country, then definitely something is telling me that this will be the real, real estate BOOM now when the prices are going down because everyone is starting to build and therefore is much more villas, houses and apartments now available to middle class buyers !!!

Montenegro was yesterdays news. We bought in 2006 but wouldn't recommend it now. It's a beautiful country but not somewhere to make a fast buck anymore. Property prices in 2008 have stalled, even fallen. The redevelopment of Tivat marina may start the market up again but for now I wouldn't touch it.

E5,000/m2???? I don't think so.

 

[Gashead]

Everybody knows that most areas of the Mediterranean are finished, the numbers are dropping and there is no more money to be made.

I came to North Cyprus Last year and personally i feel this is going to be the next major hotspot in Europe, Property value is rising on average 25-30% per year with land value rising upto 50% and this has been the case for the past 3 years.

As North Cyprus is NOT in the EU yet prices are still low for example you can pic up a 3 apartment for around £40 to £50k and 4 bedroom villas with private pool for around £150,000 currently bringing in returns of between 7 to 11%, when you compare this to South Cyprus or Spain you would struggle to find a 3 bedroom apartment for £150k on the beach front.

I have just been looking for a small plot of land myself and a came up with 1 donum (aproxx 1300m2) touching the sea with a private beach and permission to build a hotel for £200k.

this will be the next european hotspot!!!

But your deed is recognised only by Turkey and no other country in Europe, and that may be a problem if you ever try to sell.

Northern Cyprus is cheap but the risks are high. Good luck with your £200,000 hotel.

 

[Kimo]

I am surprise no mention of Bahrain. I bought off plan apartment last year it has increased in value by 65% and still only the foundation is been built. Property market in Bahrain is booming. The government is in full swing with the boom they are working on huge project called Bahrain bay just check it out very impressive plans for Bahrain.

Cheers,
Kimo

 

[gsinker]

Panama Continues to Grow

Hi I have spent a number of weeks now in Panama and am amazed at the growth that is going on down here.

Prices are rising steadily and demand for accommodation is very high. With the growth of the economy and the canal expansion it can only get better

 

[rossantony]

my money is on...

corsham, wiltshire.

this amazing secret, 20 minutes from bath has some cracking pubs, two chinese and two indians, an original cobbled street, and a jazz festival once a year.

as soon as my misses found a house there that was actually for sale on the market, she slapped down the deposit money from our joint account.

naturally when i came back from my overseas business trip i was over the moon to know that not only was bath in easy reach but swindon too!

the rental yield is unbelievable..we get £850 a month ( before taxes and rental managemet fees ) and the house is only worth £240000!

forget outer mongolia and its lack of serviced apartments for copper miners..forget mars and the nasa probe looking for signs of areas of prime real estate, its corsham all the way.

 

[Gashead]

Since when is proximity to Swindon a selling point?

And who are these two Indians that live there?

 

[wesrae]

Is it that great

corsham, wiltshire.

this amazing secret, 20 minutes from bath has some cracking pubs, two chinese and two indians, an original cobbled street, and a jazz festival once a year.

as soon as my misses found a house there that was actually for sale on the market, she slapped down the deposit money from our joint account.

naturally when i came back from my overseas business trip i was over the moon to know that not only was bath in easy reach but swindon too!

the rental yield is unbelievable..we get £850 a month ( before taxes and rental managemet fees ) and the house is only worth £240000!

forget outer mongolia and its lack of serviced apartments for copper miners..forget mars and the nasa probe looking for signs of areas of prime real estate, its corsham all the way.

OK so fine you like to live in a small market town but is it really a great investment. Looking at the rental that works at around 4% pa (before any management charges etc).

In addition, the dropping prices in UK will probablably deprecite your investment over the next couple of years.

Good luck to you it sounds like a nice town, but as an investment?????