rent or buy?

For discussion, news, comments, questions and information about Crete & Greece.
Kilkis
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Re: rent or buy?

Postby Kilkis » Thu Apr 18, 2019 3:01 pm

Even if HMRC insist on comparing prices in Sterling they allow you to offset your purchasing and selling costs against capital gains. In the UK that usually means solicitor's fees, estate agent's fees and stamp duty. I would expect that to translate into lawyer's fees, notary's fees and estate agent's fees on both transactions and transfer taxes on the purchase, so make sure you have certified records of those costs. Also you have a CGT allowance of £12,000 per year in addition to your income tax personal allowance so you would only pay CGT on any gains above that. Some information from Which?

It would also be worth arguing the case that the capital gain was made on the currency exchange not on the property by using the Euro purchase and sale prices. The rate of CGT on a property is 18 % for a normal rate tax payer and 28 % for a higher rate tax payer. Remember that the capital gain will be added to your other income in the tax year that you sell the property so that could push you into the higher rate even if you aren't normally. A capital gain made on other assets such as currency trading, e.g. using futures contracts or actual exchange, is only charged at 10 % and 20 % respectively.

Warwick

Guy M
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Re: rent or buy?

Postby Guy M » Thu Apr 18, 2019 4:04 pm

Kathleen, I think you have the right attitude.

I lived in the Netherlands for four years in the early 2000s. We rented for three months then bought a lovely three story 17th Century house on a canal in Delft. We were given a 120% interest only 75 year mortgage by the bank (unbelievably!)- the extra 20% was available to make improvements to the house. When we sold, we made a €30k loss. I thought of it like rent- we’d had the most beautiful Dutch house for effectively €7500 rent a year. I went back to Delft 10 years later and there it was as lovely as I remember it. The experience, the memories and the happiness are worth much more than the money we spent. I’d do the same again.

paul g
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Re: rent or buy?

Postby paul g » Fri Apr 19, 2019 8:33 am

In the UK a sole residence is CGT exempt in normal circumstances, I take it that's not the case in Greece.

Kilkis
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Re: rent or buy?

Postby Kilkis » Fri Apr 19, 2019 9:21 am

I am not sure what the current situation is in Greece. In principle there is no exemption for a first home but at the moment I am not sure if CGT is actually being applied in that situation. It was brought in and then it was suspended for a time and I am not sure if it has been reintroduced yet.

I think Kathleen's situation is different. From her post I understand that she does not live permanently in Greece so she is not tax resident in Greece, she remains tax resident in the UK. The property in Greece is a holiday home and HMRC would regard that as a second home so it would be liable for CGT in the UK under the UK tax code. The question then is how it should be applied. I think only a UK tax accountant experienced in dealing with money moving to/from abroad can answer that.

Warwick

Kathleen
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Re: rent or buy?

Postby Kathleen » Fri Apr 19, 2019 3:16 pm

CGT in Greece is still under suspension at present. If it were still in existence I would have been able to offset it after payment against any UK liability. The rates quoted when it was first introduced were more favourable than those in UK which would have been useful!

Kathleen

Carolina
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Re: rent or buy?

Postby Carolina » Sat Apr 20, 2019 12:57 pm

toastie wrote:
I merely posted my opinions on the fees. I didnt quite expect to get my head ripped off with silly replies from people.



When your disparaging comment: "if you are a foreigner you wil be scammed and ripped off with hidden fees and costs." turns out to be baseless, you should expect, at least, some 'silly replies'.

bobscott
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Re: rent or buy?

Postby bobscott » Sat Apr 20, 2019 1:56 pm

Carolina wrote:
toastie wrote:
I merely posted my opinions on the fees. I didnt quite expect to get my head ripped off with silly replies from people.



When your disparaging comment: "if you are a foreigner you wil be scammed and ripped off with hidden fees and costs." turns out to be baseless, you should expect, at least, some 'silly replies'.


As a dear friend of mine said some time ago: 'They come here, knowing nothing; they live here for a few months and know everything. Silly buggers - they know nowt!'
Yesterday today was tomorrow. Don't dilly dally!

Jeffstclair
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Re: rent or buy?

Postby Jeffstclair » Sat Apr 20, 2019 3:37 pm

On the rent or buy question, we bought our house in 2001 and have lived in it full time since 2006 . It's been a bargain , we could not have rented this house for the cost of buying it ,new roof , new wiring, windows ,doors, plastering ,etc ...the ENFIA has made a difference but still we feel we are doing OK...

Stavros21
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Re: rent or buy?

Postby Stavros21 » Sun Apr 21, 2019 6:27 am

Kathleen,

It's lovely to read your tale of happiness about your 'home' in Crete.

Best wishes,

James

filippos
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Re: rent or buy?

Postby filippos » Wed Apr 24, 2019 9:12 pm

I have no idea whether or not the following is relevant to anyone here but there are new taxes being introduced on sale of property in the UK from April next year. If you only have one property there's no problem - no CGT on the proceeds of sale and, currently, the same applies if you own two or more and have designated one as your principal private residence.

Earlier this month, the Government put forward plans to scrap two types of tax relief for landlords who sell a property that was once their main home. The plans seem to be aimed at buy to let landlords but are also likely to catch "accidental landlords".

An accidental landlord is someone who didn't buy a property with the intention of letting it out, but has since ended up doing so. Some may have inherited a 2nd property that is rented out. Others may have been unable to sell their home before the deadline. They may have had to relocate suddenly for a new job, bought a new home while continuing to sell the old one. Maybe they move in with a partner and decided to hang on to their own property in the short-term as a safety net. When they do come to sell their previous home (after the deadline) they will be assessed for CGT on the proceeds.

More detail and examples here

Guy M
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Re: rent or buy?

Postby Guy M » Fri Apr 26, 2019 8:04 pm

I was an ‘accidental landlord’ in the U.K. for 11 years; avoided paying any tax at all on the capital gain by spending a night in the property after the last tenant had left and before it was sold. I’m sure a good accountant will think of a way of avoiding this new tax.

toastie
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Re: rent or buy?

Postby toastie » Fri Apr 26, 2019 10:42 pm

thats what you pay a good accountant for to avoid paying tax lol

filippos
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Re: rent or buy?

Postby filippos » Fri Apr 26, 2019 11:35 pm

Guy M wrote:I was an ‘accidental landlord’ in the U.K. for 11 years; avoided paying any tax at all on the capital gain by spending a night in the property after the last tenant had left and before it was sold. I’m sure a good accountant will think of a way of avoiding this new tax.

I suspect HMRC has become a bit more diligent and in the present age it's easier for them to check things. Are you on the electoral roll at that address? If so, for how long? All the main government departments exchange information so they are able, assuming they're moderately diligent, to get info from DVLC or the Passport Office? Who has been paying the council tax? The legislation also specifies that if you have more than one house there's a liability if you sell the house in which the current owner has ever lived.

To me it makes sense that anyone who thinks they might be at risk talks to a good accountant to establish if there is a sure means of avoidance. If what I've been told is correct the legislation applies even if one of the properties is outside the UK. That could be especially relevant to anyone who lives in owned property in both Greece and UK and I'm sure we all know people who spend part of every year in each place. I think a good UK accountant could be very useful to some people.

P.S. One sure option is to sell the pre-lived in property before the deadline ut that's only about 11 months away so anyone deciding to make that choice needs to act fairly soon. Anyone potentially liable and not wanting that option needs to consult said good accountant.

Kilkis
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Re: rent or buy?

Postby Kilkis » Sat Apr 27, 2019 9:42 am

I agree with your general argument, Filippos, that government is getting much more joined up and it is gradually becoming harder to dodge round issues. I am not sure, however, how useful the electoral roll is in that process? Personally I think representative democracy is a myth so if I lived in the UK I would not vote. Consequently I would never register to vote and so would not appear on the electoral roll.

Also I know people who live here permanently and have no property in the UK but still have their name on a council tax bill of a relative so they can use the bill as proof of address if they need to provide evidence for a "UK residents only" service, so even that isn't foolproof.

Warwick

Guy M
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Re: rent or buy?

Postby Guy M » Sat Apr 27, 2019 9:26 pm

filippos wrote: I think a good UK accountant could be very useful to some people.


You are absolutely correct, Filippos. Indeed it was a good accountant who told me, at the time, that I had to spend a night in the property I had been renting if I wanted to avoid CGT. The value of a good accountant or lawyer is often overlooked by penny-wise, pound-foolish people - in Crete as well as in the U.K.


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