Expat Property Guide: Owning Property Abroad

Overview

Buying property abroad is one of the most exciting and significant decisions an expat can make. Whether you are purchasing a holiday home, a retirement property, or an investment, the process is different from buying in the UK. Every country has its own legal system, taxes, and ownership rules. This guide explains the key things you need to know before you buy, and how to plan ahead so your property is protected and your family knows what to do if something happens to you.

Key Facts

• ✓Every country has different rules for foreign property ownership.
• ✓You may need a local identity number (such as a NIE in Spain) before you can buy property.
• ✓A notary is required for property transactions in most European countries.
• ✓You may need a separate will in the country where you own property.
• ✓Inheritance laws vary significantly between countries.
• ✓EU Succession Regulation 650/2012 allows EU residents to choose UK law for their estate.
• ✓Capital gains tax rules differ between the UK and other countries.
• ✓You may be liable for local property taxes, wealth taxes, and inheritance taxes.

Step by Step

1. 1

   Research the local property market and legal system

   Before you buy, research the property market in your chosen country and understand the local legal system. Property ownership rules, buyer protections, and the role of professionals such as notaries and lawyers vary significantly between countries. Use a local lawyer who specialises in property transactions.

2. 2

   Obtain a local identity number

   Most countries require foreign buyers to obtain a local identity or tax number before they can purchase property. In Spain, this is the NIE (Numero de Identificacion de Extranjero). In Portugal, it is the NIF. In France, you will need a French tax number. Apply for this early as it can take time.

3. 3

   Appoint a local lawyer

   Always use an independent local lawyer who represents your interests, not the seller's. They will carry out due diligence on the property, check for debts or charges, review contracts, and guide you through the purchase process. Do not rely on the estate agent or the seller's lawyer.

4. 4

   Understand the costs and taxes

   The costs of buying property abroad are often higher than in the UK. In addition to the purchase price, you may pay transfer tax, VAT, notary fees, legal fees, and registration fees. Ongoing costs may include local property taxes, community fees, and wealth taxes. Get a full breakdown of costs before you commit.

5. 5

   Make a local will

   If you own property in another country, it is strongly advisable to make a separate will in that country to cover those assets. Inheritance laws vary significantly, and a UK will may not be recognised or may cause complications. In EU countries, you may be able to elect for UK law to apply to your estate under EU Succession Regulation 650/2012.

6. 6

   Record everything in your vault

   Keep a record of your property details in your vault: the address, purchase price, mortgage details, local lawyer's contact details, local identity number, and the location of all property documents. Include details of any local taxes you pay and any ongoing costs. This information is invaluable for your family if something happens to you.

Frequently Asked Questions

Do I need a local will if I own property abroad?

It is strongly advisable. A UK will may not be recognised in another country, or may cause significant delays and costs. Making a separate will in the country where you own property ensures your wishes are clear and can be acted on quickly. Speak to a solicitor who specialises in international estate planning.

What is EU Succession Regulation 650/2012?

This EU regulation allows people living in EU countries to choose the law of their nationality (such as UK law) to govern the succession of their entire estate, including property in EU countries. This can be useful for UK nationals living in the EU who want their estate handled under UK law. Note that the UK itself is not bound by this regulation following Brexit.

Will I pay inheritance tax in both the UK and abroad?

Possibly. UK inheritance tax applies to the worldwide estate of UK domiciled individuals. The country where the property is located may also charge its own inheritance or succession tax. Many countries have double taxation agreements with the UK to prevent the same assets being taxed twice, but the rules are complex. Take specialist advice.

What is a NIE number and do I need one?

A NIE (Numero de Identificacion de Extranjero) is a tax identification number required for all foreigners conducting financial transactions in Spain, including buying property. You can apply for one at a Spanish consulate in the UK or at a police station in Spain. You will need it before you can complete a property purchase.

What happens to my overseas property when I die?

This depends on the country, your residency status, and whether you have a local will. In some countries, forced heirship rules mean you cannot leave property to whoever you choose. In others, your UK will may be sufficient. Without a local will, the property may go through a lengthy and expensive local probate process.

Should I buy property in my own name or through a company?

This depends on the country and your circumstances. In some countries, buying through a company can reduce inheritance tax or simplify succession. In others, it creates additional costs and complications. Take specialist legal and tax advice before deciding on the ownership structure.

Official Resources

These links go directly to official government and trusted organisation websites.

• Buying property abroad

  GOV.UK guidance on buying property in another country

  GOV.UK
• Tax on foreign property

  HMRC guidance on tax on income from overseas property

  GOV.UK
• EU Succession Regulation

  EU guidance on cross-border succession and inheritance

  European e-Justice
• STEP (Society of Trust and Estate Practitioners)

  Find a specialist in international estate planning

  STEP