Re-mortgage primary residence for overseas property

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    Re-mortgage primary residence for overseas property

    I am hoping to buy an overseas property.

    In the country where I am buying it isn't partical to take out a mortgage.

    Can I remortgage my main residence and use the interest paid on this to offset against the rental income from the property abroad.

    #2
    Originally posted by Jezzer View Post
    I am hoping to buy an overseas property.

    In the country where I am buying it isn't partical to take out a mortgage.

    Can I remortgage my main residence and use the interest paid on this to offset against the rental income from the property abroad.
    If you are letting a property abroad, you should take advice regarding taxation in that country. In some countries, you are not allowed any deduction for loan interest in the calculation of rental income on which you are charged tax.

    You may also need to pay UK tax on same rental profit from properties abroad, to the extent that the UK tax exceeds the tax you have been charged by the foreign country.

    Any interest you pay on a loan to purchase the property abroad, could be taken into account in the calculation of your UK liability on foreign property. It does not matter on which property the loan is secured.

    If the foreign tax is higher than the UK tax on the same income, you end up paying the foreign tax. If the Uk tax is higher, you end up paying the foreign tax plus any excess tax to the UK government so that your total liability to both countries is the same as the UK tax.

    Ramnik
    Private advice is available for a fee by sending a private message.

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      #3
      In the country I am buying there is no tax on rental profits, so I only have to worry about UK income tax.

      It's good news that I can offset any mortgage payments against the rental income.

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        #4
        Originally posted by Jezzer View Post
        In the country I am buying there is no tax on rental profits, so I only have to worry about UK income tax.
        I am curious....which country is it that doesn't charge you any tax on rental income?

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          #5
          The country I'm thinking about is the Dominican Republic.
          I'm told this is isn't going to be the case there for much longer.

          The other one I know of is Dubai.

          It's not the great tax break that it first seems. Normally you would offset any tax paid abroad against uk tax. If there's no overseas tax it just means that you pay all of the uk tax.

          Comment


            #6
            Originally posted by Jezzer View Post
            The country I'm thinking about is the Dominican Republic.
            I'm told this is isn't going to be the case there for much longer.

            The other one I know of is Dubai.

            It's not the great tax break that it first seems. Normally you would offset any tax paid abroad against uk tax. If there's no overseas tax it just means that you pay all of the uk tax.
            Well done.

            Not many people figure out that you still have to pay the UK tax and therefore the tax-free break is not what it seems at first sight.

            Ramnik
            Private advice is available for a fee by sending a private message.

            Comment

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