Selling Property Overseas
Tuesday, 5 February 2008
Overseas property is always a hot topic especially as the weather at home get's increasingly worse and people look to make a break to the sun so Liz is here with her guide to selling property overseas.
Selling Property Overseas
So you've decided to off load the overseas property and probably don't really know where to start or how long should you expect for your overseas property to go over the line in terms of it being a 'done deal'?
Well, on a positive note, if you've managed to buy a property successfully and you were happy with the agent you bought it from, that agent will probably be your first port of call again. But don't just rely on one agent for a valuation. Get a least three valuations, (as you would at home!) they should all generally be within the same price range (within reason!) and taking the average of the three should give you a fair price/valuation for your property.
The good thing about selling overseas is that unlike at home we do not have multiple listings whereas in most other countries they do. (Another days discussion!) In Ireland most agents want exclusivity on the sale of a house. Whereas on the Continent of Europe, North America, Australia and New Zealand, multiple listing are common place. This simply means that your property will be listed with as many agents you can get your hands on and whoever sells the property, gets the commission! Simple!
Expect the sale to take 'Time'
Do not expect your property to be sold overnight (although that can happen, but rarely!), We've recently seen a global slow down and this has resulted in overseas second hand holiday home properties taking longer to sell. Perhaps up to a year and more. There's always the competition of new developments that are just around the corner but in most cases there's a two year completion time and if you find someone who just doesn't want to wait that long and wants to be in their holiday home immediately..then you could be lucky!
Tax and legal
Your property when it's sold will be subject to capital gains. This is applicable in both countries e.g. Spain and Ireland (if you are bringing the money back into the country)
Capital gains is paid only on the profits achieved on the sale of the property.
For example: If you bought the house for €100k and sold it for €120k then your capital gains is paid on the €20k profit. As an Irish resident you must pay the total amount of 20% capital gains.
How this works is as follows: Capital gains for non residents in Spain in 18% and in Ireland its 20%. So, you will pay 18% capital gains to the Spanish revenue which is €1800 and 2% to the Irish revenue of €200.
You will need a Spanish tax certificate to prove that you've paid your gain in Spain, so a good English speaking Spanish Lawyer is required to make sure the job is done!
If you've been renting your overseas holiday home, Any rental income is liable for tax, so you need a good accountant to talk you through that.
You can also reduce your tax and capital gains as long as you have receipts to prove that you have improved the property during the time of owning it.
For example: if you put in a new kitchen, repainted or added air conditioning all these can be used towards a reduction in your tax bill.
Buying and selling
The traditional markets of Spain, France, Italy and Portugal are always markets that will remain in the long term both politically and economically stable. Emerging markets in Eastern Europe will be more of a risk and this is proven when we look at the amount of Irish investors who are having difficulty selling property in Turkey for example.
Spain is still the top country for both holidays and overseas holiday homes for the Irish.
In my own overseas research business I'm seeing that there is still a healthy appetite for overseas purchasing and Spain is still top of the bunch.
However, there are still lots of people who want to sell especially on the Costa del Sol.
Anyone who is looking for a reasonably quick sale in Spain, should check out www.direct-auctions.com who are the only auction house on the Costa del Sol and have auctions on the first Thursday of every month.
They usually sell for anyone who is looking to get out of the market quickly, they value their properties to 'sell' and therefore there are bargains to be had. This agent is all about a 'quick turn around', which suits many people in a slow market.