Buying overseas property in a tax haven is this really fair?
By: nicholas marr | Posted: 03rd September 2006
Copyright 2006 Nicholas Marr
We all hate paying tax but sadly it is a fact of life that the majority of countries including the USA and the UK have heavily invested in getting the most tax from its citizens dead or alive.
US property investors
The United States is unlike most other countries in that its citizens are subject to U.S. tax on their worldwide income no matter where in the world they reside. U.S. citizens therefore cannot avoid U.S. taxes either by emigrating or by transferring assets abroad. Forbes magazine suggest that some US nationals choose to give up their United States citizenship rather than be subject to the U.S. tax system
UK property investors
In the UK property investors who make a profit on their property portfolios are taxed quite heavily on the resulting profits with a Capital Gains Tax. Investors would rush to buy overseas property in thier droves if it were simply a case of moving abroad. The UK government will still hold you liable even if you now have an address in the Bahamas. UK residents need to live abroad for 3 years before the tax man will class you as a non resident and therefore not hold you liable for UK taxation. The system allows those no longer classed as residents to visit Britain for under 90 days per year before thier status changes back to that of a resident.
Is avoiding tax immoral?
Becoming a tax exile in a country where taxes on your personal income are appreciably lower or even nil has its morale implications. Some may see this as simply good business others may say that avoiding taxes others have had to pay is simply not fair. This is an area for each individaul or corparation to decide. It is a fact governments do not like tax havens and some say that the very term has fallen into disrepute.
Is there a place in the world where tax payers can escape taxation?
Earning a tax free salary is a dream come true for many, just think what would your income be without paying a penny of tax. What would you buy with that extra income? There are many locations worldwide that personal taxation is not part of the government structure. Overseas property buyers with future taxation issues may want to look at the following tax havens.
A few overseas regions known to be tax havens
• Aruba
• Andorra
• Anguilla
• Antigua and Barbuda
• The Bahamas offers ex pats no income tax and no inheritance tax.
• The Cayman Islands offers no income no Capital Gains tax and no inheritance tax
• Belize offers foreigners no restrictions when buying property and low income tax and no inheritance or capital gains taxes
• Dubai offers a tax free existence with no personal income tax capital gains inheritance taxes.
• Bahrain
• Cook Islands
• Costa Rica
• Cyprus
• Gibraltar
• Grenada
• Isle of Man
• Jersey
• Liberia
• Liechtenstein
• Luxembourg
• Maldives
• Mauritius
• Monaco
• Montserrat
• Nauru
• Netherland Antilles
• Panama
• Samoa
• San Marino
• Seychelles
• The Republic of Seychelles
• St Lucia
• St Kitts and Nevis
• St Vincent and the Grenadines
• Tonga
• Turks and Caicos
• US Virgin Islands
Buying property in a tax haven.
It is clear that property investors seeking a destination to live to escape the clutches of the tax man need to plan their escapes. Countries offering low or no taxation want your money and want your business. Some countries offer a lower tax rate to large corporations, in exchange for the companies locating a division of the company in the host country and employing some of the local population. Overseas property investors will recognise that this all makes for desirable property investment conditions. This translates into the likelihood that property bought in a tax haven is set to have high demand from buyers which should produce good capital returns.
In all overseas property investors may win on all counts when buying property and living in a tax haven.
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Nicholas Marr is the CEO of Marr International a UK based property marketing company behind one of Europe's fastest grwing overseas property web site at http://www.homesgofast.com . You can learn more about this author at http://homesgofast.typepad.com/overseas_property/
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Tags: good business, droves, days per year, fact of life, forbes magazine, personal income, tax havens, property investors, capital gains tax, tax man, tax payers, uk residents, marr