Ask The Property ExpertPosted on: 11 June 2009 by Gareth Hargreaves
Welcome to 50connect’s new property advice column. If you have a burning question on any aspect of buying, selling, moving or improving, then resident property expert Laura Henderson would love to hear from you.
Send your property problems to email@example.com titled “Ask The Property Expert”.
H Clark from Southampton asks:
"My husband and I are nearing retirement and plan to invest overseas. One of our biggest concerns is inheritance tax.
What would you advise?"
Planning your exit strategy should be a top priority when buying abroad and that includes getting the right advice on tax liabilities, including those that may arise on sale or on death. Many overseas investors fail to take basic financial precautions and land up paying inheritance tax twice (in Britain and locally) simply because they didn’t check the rules.
While some countries such as Portugal and Greece attract no inheritance tax, rates in others can exceed 80%, particularly if the beneficiary is not direct family. In Spain and France for example, neither country allows assets to pass automatically to spouses tax-free in death. In both cases spouses and children have a tax-free allowance, and the rate of tax they then pay depends on the value of the estate and their relationship to the deceased.
Many buyers opt to fund their overseas investment by releasing equity in their UK home, but there can be tax advantages to taking out an overseas mortgage, one of which relates directly to inheritance tax. In Spain and France, inheritance tax is charged only on the equity that is held in the property – the proportion of a mortgage unpaid is not taken into account, as it is categorised as a ‘debt’. Even if your overseas property has no existing mortgage debt, you could consider re-mortgaging to reduce your inheritance tax liability. Your liability will of course depend on the value of your estate and local taxation rates.
Life insurance should also be taken into account alongside any mortgage agreement. This doesn’t circumvent inheritance tax, but it should ensure that the policy releases a lump sum upon death to mitigate any outstanding mortgage or tax liability.
Always consult with a specialist lawyer versed in the nuances of your chosen destination. Visit the Law Society website www.lawsociety.org.uk for further guidance.
Mr J Lawson from Hertfordshire asks:
"I am looking to move up north to be nearer my daughter and grandchildren.
Is there anything I can do to help speed up the sale of my home?"
Well, we can start with some good news. The number of homes sold by estate agents reached an 18-month high last month with the average agent agreeing 10 sales during April, up from eight in March and a low of just five last August, according to the National Association of Estate Agents. The Royal Institute of Chartered Surveyors also confirms inquiries from potential buyers rose at their fastest pace in almost a decade in April.
That said, it’s still very much a buyer’s market, but with few sellers on the ground, competition is limited, which gives you a golden opportunity to make your mark.
First off - be realistic about the price – secure a minimum of three independent valuations and don’t be tempted to just run with the highest one. Research online, to find out what comparable properties are going for in your neighbourhood. Top sites include Rightmove, Primelocation and Findaproperty.com, while the Land Registry (www.landregistry.gov.uk) will give you a detailed breakdown of property prices in your area.
It goes without saying but first impressions do count. So mow the lawn, de-clutter the living room and touch up the paintwork. Clear the hallway of coats and boots and have your windows cleaned. If you have pets, ask a neighbour to look after them while potential buyers tour.
Define each area – buyers need to know what each room is for. Sell the lifestyle and you’ll sell your house. If you have a box room used for storage, convert it into a small office – it adds another tick to the property particulars.
Get up close and personal with your agent – they’ll be hungrier for the business in the current climate so get them working for you. Many agents will try and pin you down to a three-month contract. Better to negotiate a four-week trial period – that way if they don’t come up to scratch, you can switch to a competitor. Estate agents fees (between 1% and 3%) can easily eat into your profit margin, so be prepared to negotiate and have the final fee in writing.
Do a snag-test – take a tour of your home and fix the cracked tiles, marked walls and the chipped woodwork, all of which can detract from the show-home feel. Honesty pays, so if you are unable to undertake a particular repair then flag it up to the buyer. This will avoid sowing seeds of doubt if it comes up in the survey.
When you do get an offer, find out as much as possible about the buyer. Are they in a chain? How are they financing the purchase? How committed are they to moving? The more informed you are, the better you’ll be at keeping the channels of communication open. Understanding a buyer’s motivational needs is half the battle to securing a sale.
Please note: Laura regrets that she cannot answer letters personally. All correspondence should be sent to firstname.lastname@example.org titled "Ask The Property Expert".
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