Over the last decade or two, the Uk government has imposed restrictions on several of the tax breaks formerly available to international buyers.
In that regard, purchasing a house in the UK may be less appealing than it formerly was in terms of tax planning. Having said that, there are a variety of reasons why someone would want to buy a home in London.
As you point out, foreign buyers must pay a 2% stamp duty land tax premium on property purchased in England and Northern Ireland. It’s worth remembering that this only applies if both individuals (for example a married couple) are non-residents of the UK.
Furthermore, anyone acquiring a home as a second residence, even if their first property is situated outside of the UK, must pay a 3% fee (the surcharge is 4 percent in Scotland and Wales).
For example, a UK taxpayer purchasing a property in England or Northern Ireland for £1.8 million (after September 30, 2021, when the pandemic lower rates are no longer applicable) would pay stamp duty of £129,750; or £183,750 if it was a second property.
However, as a non-resident buyer looking to buy a second property, you would spend £219,750. Forsters’ property attorney, Robert Barham said that Non-resident buyers should also be conscious that they, like UK taxpayers who are also higher or extra rate taxpayers, will be subjected to UK capital gains tax when they sell their real estate investment at a flat rate of 28% of the rise in the property’s value over their ownership term.
Advocates advising non-resident purchasers of UK property used to spend a significant amount of time and energy advising the client on the best ownership structure to use in order to minimize exposure to UK tax.
This is currently uncommon since the benefits of employing such structures have been largely neutralized by tax reforms, and many structuring agreements ultimately result in increased tax rate. For instance, if you purchase a family house in England through a non-UK business, stamp duty will be levied at a fixed rate of 17%.
In most situations, there is no feasible or tax-effective alternative to purchasing real estate in the names of the actual buyers.
One apparent drawback is that because the Land Registry’s data are available to public scrutiny, anybody may see who owns each property, including the amount paid by the original owner.
However, whether or not purchasers will lose money is almost completely dependent on the fluctuations of the real estate market.
What Is the Most Efficient UK Property Finder Software For Non-Resident Property Buyers?
You can select from a range of Proptech Software to obtain the best property values. One of the most well-known is DealSourcing. This proptech technology can automate the process by combining many components into a single software that acts as your personal real agent. Using algorithms and automation, the system can find investments all across the internet and sort them by ROI.
It will save you both time and money! The capacity of the platform to discover high-yielding assets is its main selling feature. DealSourcing.co is a must if you want to invest in UK real estate.
The technology also estimates the return on investment for each property posted on Rightmove, Zoopla, and Gumtree, as well as identifying low-cost houses for sale, saving investors hours of research time.
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