If you propose to invest in property abroad or take a more permanent step and live abroad, tax planning is one of the most important considerations. Obtaining tax advice – and this should be from a professional tax adviser with knowledge of tax regulations both in your home country and the country where you plan to invest – before you make any investment decisions means that you can make the most of opportunities to reduce your tax liabilities.
Within the general tax considerations of owning assets abroad is the question of inheritance tax, an aspect that many property investors tend to overlook. However, this is one area that has wide implications for the future of your heirs. Careful inheritance tax planning can make the difference between your heirs continuing to enjoy your investments or losing them to pay a large inheritance tax bill.
While inherited assets in some countries attract no inheritance taxes, in other countries taxes can be higher than 80%, particularly if the beneficiary is not a close relative. It is therefore very important to bear this in mind when making investment plans. A further issue to consider is that regardless of the country you choose to invest in or move to, you may still be liable for inheritance tax in your home country. “Inheritance tax rules have important implications for investors,” comments Ken Thorkildsen, Director of Obelisk Private Finance. “If you do not plan your inheritance tax carefully, you may find that your heirs face high tax bills both in the country where you invested and in the UK.”
In general, resident heirs pay less inheritance tax than those who are non-resident and many countries also offer generous deductions or total exemptions for beneficiaries who are direct relatives, e.g. spouse, children or parents. This is the case in Andalucía, home to the Costa del Sol, where recent legislation means that direct heirs who have been resident in the region for 5 years, are exempt from inheritance tax on assets up to the value of €175,000. Ken welcomes this recent development which he believes “has hugely positive implications for the resident ex-pat population in one of Spain’s most popular investment destinations.”
Laws on inheritance tax are complicated and inheritance tax regulations vary in individual countries. For example, Spanish law rules that in the case of a married couple, 50% of the net assets are liable for inheritance tax on first death, whereas under UK law, a married couple may be liable for 100% of the assets minus allowances. Basic familiarity with a country’s tax regimes and its implications should be a high priority for the global property investor. This coupled with expert guidance from a tax expert, can make a substantial difference to the planning of an investor’s estate and by extension, to the beneficiaries. “An essential aspect of owning assets in more than one country is to draw up a will in each country,” advises Ken. “This helps speed up the inheritance process and makes things much easier for your heirs.”
Given the complexity of inheritance regulations and the fact that in many countries they are in a state of constant change, Ken offers the following advice: “No action should be taken without consultation with a professional tax adviser. While there are many ways of reducing inheritance tax liability, only an expert can offer guidance on the right ones for you and your particular situation.”
Wednesday, July 30, 2008
Saturday, July 26, 2008
Mortgages
Garanti Bank has begun to offer a new “non resident mortgage” to foreigners looking to purchase property in Turkey. With the new service the bank will enable foreigners to obtain lira or foreign exchange indexed loans with a maximum 240-month maturity. Foreigners will also be able to obtain loans of YTL 500,000 or the equivalent amount in foreign currency
Saturday, July 19, 2008
Tapu
A circular concerning the implementation of a bill regulating property sales to foreigners was issued Thursday. The circular restarted the process of property sales to foreigners, which had been suspended April 16 after the Constitutional Court's annulment of the existing legislation created a legal loophole.
The regulation enables foreign companies, which had previously been granted rights equal to Turkish ones to purchase real estate on the basis of the Foreign Direct Investment Law-No. 4875, to own real estate by permission of the governor's office. The regulations, which will come into effect in three months, will determine the basic aspects of how to receive this permission. As a result, no land will be sold to the companies concerned until then.
Meanwhile, companies operating in foreign countries and foreign real persons will be able to own up to 10 percent of the land within a building scheme. In addition, the area that foreigners can own will be restricted to two and a half hectares and demands by foreigners that surpass these limits will be rejected, according to the new amendment.
Parliament passed the bill regulating property sales to foreigners on July 3 after it was revised taking into consideration the Constitutional Court's annulment of previous legislation.
The regulation enables foreign companies, which had previously been granted rights equal to Turkish ones to purchase real estate on the basis of the Foreign Direct Investment Law-No. 4875, to own real estate by permission of the governor's office. The regulations, which will come into effect in three months, will determine the basic aspects of how to receive this permission. As a result, no land will be sold to the companies concerned until then.
Meanwhile, companies operating in foreign countries and foreign real persons will be able to own up to 10 percent of the land within a building scheme. In addition, the area that foreigners can own will be restricted to two and a half hectares and demands by foreigners that surpass these limits will be rejected, according to the new amendment.
Parliament passed the bill regulating property sales to foreigners on July 3 after it was revised taking into consideration the Constitutional Court's annulment of previous legislation.
Thursday, July 17, 2008
FADESA
One of Spain's major developers, Martinsa Fadesa, has filed for voluntary administration after failing to renegotiate a €150m (£119m) loan earlier this week. The company reportedly owes The debts of around €5bn (£3.98bn).
company said in a regulatory filing that it had lodged a petition for court administration, marking the start of Spain’s largest bankruptcy process since the introduction of new rules in 2004.
It follows the rescue in March of Immobiliaria Colonial by by creditor banks, which swapped debt for equity held by the controlling shareholders in Spain’s second-largest property company.
Martinsa Fadesa is the latest in a long line of Spanish property companies to run into difficulties, following the collapse of the Spanish housing market last year, after a decade or so of booming activity. Many small construction companies and property developers have either filed for protection or been absorbed by larger groups. The number of companies entering administration this year has more than doubled compared with 2007, according to lawyers.
“Filing for voluntary administration is the best way to avoid aggravating a crisis situation that could become irreversible and have serious repercussions on creditors and all shareholders' interests," said a spokesperson. "The company, along with its administrators, will from now on focus in revenue-generating, through the sale of assets and land management and restructuring the company so the project can be revived.”
company said in a regulatory filing that it had lodged a petition for court administration, marking the start of Spain’s largest bankruptcy process since the introduction of new rules in 2004.
It follows the rescue in March of Immobiliaria Colonial by by creditor banks, which swapped debt for equity held by the controlling shareholders in Spain’s second-largest property company.
Martinsa Fadesa is the latest in a long line of Spanish property companies to run into difficulties, following the collapse of the Spanish housing market last year, after a decade or so of booming activity. Many small construction companies and property developers have either filed for protection or been absorbed by larger groups. The number of companies entering administration this year has more than doubled compared with 2007, according to lawyers.
“Filing for voluntary administration is the best way to avoid aggravating a crisis situation that could become irreversible and have serious repercussions on creditors and all shareholders' interests," said a spokesperson. "The company, along with its administrators, will from now on focus in revenue-generating, through the sale of assets and land management and restructuring the company so the project can be revived.”
Thursday, July 10, 2008
Market
News in the foreign press pertaining to Turkey's real estate sector experienced a surge in the aftermath of the approval of a bill by Parliament on July 5 that regulates property sales to foreigners. The attention paid to Turkey's real estate sector, which is characterized by low prices, has been increasing, wrote British newspaper The Times, adding that prices in the sector are expected to skyrocket if Turkey manages to join the European Union.
“It is possible to purchase a property on Turkish shores at a relatively low price of 35,000 sterling (pounds). Does this sound attractive to you?” wrote the paper. “A clever couple can buy a property with a little amount of deposit and with two credit cards. Credit-card companies provide the opportunity of zero interest rates for 15 months period for those with high credit rankings,” The Times wrote.
The paper emphasized that prices in the country's real estate sector are far lower than that of the EU average. “British customers have started to settle in Turkey's popular cities such as Istanbul and coastal areas such as Antalya and Bodrum in the aftermath of the opening of Turkey's real estate market to foreign customers in 2003. The investors expect an increase in the prices of the country's real estate market if Turkey becomes a member of the European Union,” wrote the paper.
“It is possible to purchase a property on Turkish shores at a relatively low price of 35,000 sterling (pounds). Does this sound attractive to you?” wrote the paper. “A clever couple can buy a property with a little amount of deposit and with two credit cards. Credit-card companies provide the opportunity of zero interest rates for 15 months period for those with high credit rankings,” The Times wrote.
The paper emphasized that prices in the country's real estate sector are far lower than that of the EU average. “British customers have started to settle in Turkey's popular cities such as Istanbul and coastal areas such as Antalya and Bodrum in the aftermath of the opening of Turkey's real estate market to foreign customers in 2003. The investors expect an increase in the prices of the country's real estate market if Turkey becomes a member of the European Union,” wrote the paper.
Wednesday, July 9, 2008
Parador
Parador Properties, which had a number of overseas operations, including Cyprus, has gone into voluntary administration.
The company was once considered to be one of Europe’s top estate agents. It used to fly prospective purchasers to their desired destinations and offered advice about specific areas and communities. Simon Lambert and managing director Jack Hamilton founded Parador in 1998.
Parador’s PR company, Quay West Communications, announced: “It is with regret that Parador Properties has announced that, due to the downturn in the overseas property market, it has gone into voluntary administration. This does not affect property purchases by any of its clients, as all contracts were made between the individual client and the builder; Parador Properties acted only as an introductory agent.”
The company was once considered to be one of Europe’s top estate agents. It used to fly prospective purchasers to their desired destinations and offered advice about specific areas and communities. Simon Lambert and managing director Jack Hamilton founded Parador in 1998.
Parador’s PR company, Quay West Communications, announced: “It is with regret that Parador Properties has announced that, due to the downturn in the overseas property market, it has gone into voluntary administration. This does not affect property purchases by any of its clients, as all contracts were made between the individual client and the builder; Parador Properties acted only as an introductory agent.”
Thursday, July 3, 2008
Tapu
A DRAFT bill seeking to expand the scope of the law regulating property sales to foreigners was today (THURS) endorsed by Parliament.
The bill, which was discussed in Parliament last week, has been taken back to the Justice Commission at the last minute.
Amendments for opening up properties in prohibited military zones and strategic regions (lands) to foreigners through permission from governor's offices were sent to the Justice Commission for ratification.
This was passed, and sent back to Parliament which duly gave the title deeds lawchanges the nod. They now await being rubber-stamped by President Abdullah Gul.
During previous meetings in Parliament, the ruling Justice and Development Party, or AKP, was forced to withdraw the regulation expanding the scope of property sales due to opposition pressure.
The regulation, which was taken back to the Committee at the last minute, enables private business enterprises in Turkey launched or contributed to by foreign investors to exercise the rights for immovable and limited property for conducting their operations enumerated in main contracts.
The same principal will be valid in case immovable properties are transferred to another company with foreign investment or in case an immovable owned company with national capital becomes foreign owned through share transfer.
Acquisitions of companies in strategic properties under Article No 28 of the Law on Prohibited Military Zones and Security Zones and in military zones, security zones and some strategic lands enumerated in the same law, will be subject to the permission of governor under whose jurisdiction the related property falls.
The demand for permission will be decided after an evaluation of the acquisition's conformity with the country's security and operation field, in the commission established with the participation of related representatives within the governor's office.
The draft bill handled by Parliament for property sales to foreigners, maintains foreign persons and institutions can possess immovable lands, 10 percent of the total land, within the frameworks of zoning implementation plan and piecemeal plan, while the regulation expands the scope of possessing properties.
The bill, which was discussed in Parliament last week, has been taken back to the Justice Commission at the last minute.
Amendments for opening up properties in prohibited military zones and strategic regions (lands) to foreigners through permission from governor's offices were sent to the Justice Commission for ratification.
This was passed, and sent back to Parliament which duly gave the title deeds lawchanges the nod. They now await being rubber-stamped by President Abdullah Gul.
During previous meetings in Parliament, the ruling Justice and Development Party, or AKP, was forced to withdraw the regulation expanding the scope of property sales due to opposition pressure.
The regulation, which was taken back to the Committee at the last minute, enables private business enterprises in Turkey launched or contributed to by foreign investors to exercise the rights for immovable and limited property for conducting their operations enumerated in main contracts.
The same principal will be valid in case immovable properties are transferred to another company with foreign investment or in case an immovable owned company with national capital becomes foreign owned through share transfer.
Acquisitions of companies in strategic properties under Article No 28 of the Law on Prohibited Military Zones and Security Zones and in military zones, security zones and some strategic lands enumerated in the same law, will be subject to the permission of governor under whose jurisdiction the related property falls.
The demand for permission will be decided after an evaluation of the acquisition's conformity with the country's security and operation field, in the commission established with the participation of related representatives within the governor's office.
The draft bill handled by Parliament for property sales to foreigners, maintains foreign persons and institutions can possess immovable lands, 10 percent of the total land, within the frameworks of zoning implementation plan and piecemeal plan, while the regulation expands the scope of possessing properties.
Tourism
Tourist arrivals to Turkey increased by 15 percent over the first six months in comparison with the first half of 2007, according to figures published by the Turkish Hotels Federation, or TÜROFED, yesterday.
“The first half of 2008 has been a good season. We expect the growth to continue for the rest of the year,” Ahmet Barut, chairman of TÜROFED, told reporters in Istanbul.
“Especially in Antalya, Muğla, İzmir and Istanbul, the sector grew 18-19 percent. This is a very pleasing development. We expect to end this year with 27 million tourists. For the year ahead, our expectation is to host 30 million tourists,” Barut said.
Politics and Turkey's image
Responding to a question related to the recent arrests of former generals and journalists critical of the current Justice and Development Party, or AKP, government Barut said the political developments are unlikely to have a major impact on the industry, but can reflect on the country's overall image abroad. “However, of course, all kinds of standards such as physical and legislative infrastructure, life standards, democratic standards are values that can either improve or worsen the image of a country,” he said.
The recent increase in electricity prices, on the other hand, is likely to balance out some of the growth in the sector, Barut added. Electricity prices in Turkey were increased by 22 percent in late June. “The increased electricity prices can increase costs by YTL 25,000 for a single hotel during the season,” he noted.
UK, the Netherlands lead arrivals in Muğla
In Muğla province tourist arrivals by air and sea increased by 16 percent in comparison with the same period last year. Muğla Governor Ahmet Altıparmak told reporters yesterday that some 947,040 foreign tourists visited the province's resorts including Marmaris, Fethiye, Bodrum, Dalaman and Datça over the first six months of the current year. Last year the corresponding figure was 816,961. The largest share of tourists to Muğla arrived from the United Kingdom (426,893 people) and the second-largest group from the Netherlands (69,678 people).
“The first half of 2008 has been a good season. We expect the growth to continue for the rest of the year,” Ahmet Barut, chairman of TÜROFED, told reporters in Istanbul.
“Especially in Antalya, Muğla, İzmir and Istanbul, the sector grew 18-19 percent. This is a very pleasing development. We expect to end this year with 27 million tourists. For the year ahead, our expectation is to host 30 million tourists,” Barut said.
Politics and Turkey's image
Responding to a question related to the recent arrests of former generals and journalists critical of the current Justice and Development Party, or AKP, government Barut said the political developments are unlikely to have a major impact on the industry, but can reflect on the country's overall image abroad. “However, of course, all kinds of standards such as physical and legislative infrastructure, life standards, democratic standards are values that can either improve or worsen the image of a country,” he said.
The recent increase in electricity prices, on the other hand, is likely to balance out some of the growth in the sector, Barut added. Electricity prices in Turkey were increased by 22 percent in late June. “The increased electricity prices can increase costs by YTL 25,000 for a single hotel during the season,” he noted.
UK, the Netherlands lead arrivals in Muğla
In Muğla province tourist arrivals by air and sea increased by 16 percent in comparison with the same period last year. Muğla Governor Ahmet Altıparmak told reporters yesterday that some 947,040 foreign tourists visited the province's resorts including Marmaris, Fethiye, Bodrum, Dalaman and Datça over the first six months of the current year. Last year the corresponding figure was 816,961. The largest share of tourists to Muğla arrived from the United Kingdom (426,893 people) and the second-largest group from the Netherlands (69,678 people).
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