This is the time of year when many go and stay at their home in the sun or start to think about buying one.

A second property has become far more common but you need to be aware their are tax issues to deal with. That's the case whether it's a buy to let or just a holiday home for you in the sun. Properties abroad do have additional tax complications. The main considerations for UK taxes are...

1. Any rental income from the property is liable to UK income tax.
   
   
2. Capital Gains Tax - this can occur on sale or on transfer of the property to other family members or trusts.
   
   
3. Inheritance Tax - UK domiciled individuals have to pay IHT on their assets anywhere in the world (subject to the £285K starting limit).

There are ways of mitigating all of these taxes. For example income tax can be helped with putting the property in the name of the spouse (or civil partner) with a lower marginal tax rate or into joint names. Often the ownership of the property needs careful planning in advance for all taxes.

However, overseas properties have further complications. The property may also be liable to taxes in the country in which it is located. As well income tax, CGT and IHT, there can be annual wealth taxes on the value of the property, stamp duty at far higher rates than here and regional and local council taxes. It can often help to not purchase the property directly but the shares in a locally incorporated company that purchases the property.

For income tax, CGT and IHT that is payable both in the UK and abroad, the tax paid overseas can usually be deducted from the tax payable in the UK.

So before purchasing your home in the sun, please contact us for advice. Often you will also need advice from a professional in the country in which you are purchasing.

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