Overseas Property Investment Consultancy & UK Property Investment Consultancy

The United States conjures up images of good living. Big cars, spacious homes, huge shopping malls, world class theme parks and every kind of landscape imaginable – it’s the American dream.

At almost 10m square kilometres and with over 300 million people, the United States is the third largest country on earth by both total land area and population. With the biggest economy in the world and the highest military budget by far (43% of global military spending), the USA is the world’s only remaining super power.

Blessed with some of the planet’s most spectacular landscape, from the Nevada Desert to the Florida Everglades; the Rocky Mountains to the prairies of the Midwest, and the ancient forests of the west coast to the tropical beaches of the south, this is a country that really does have it all.

The United States is a relatively new country. Gaining independence from Great Britain in the late 18th century it has grown dramatically ever since. A melting pot for countless diverse nationalities, the country is made up of people from all corners of the world and continues to draw millions of people each year all searching for their own piece of the American dream.

This is also a highly visited country. 2nd in the world by visitor numbers, tourism adds billions of dollars to the American economy annually. Home of the theme parks, Florida alone welcomes over 5 million international visitors each year.

Spain’s wealth tax to return

France and Spain are among the most popular choices for Brits buying property abroad. Some may be deterred by the image these countries have of being ‘high tax’ countries, particularly as they both have what are called ‘wealth taxes’, but this needn’t be so.

However, it’s a good idea to be aware of the tax system in any country before you commit yourself to buying, and this is where a professional adviser will prove invaluable. In particular, if you are considering buying a property in Spain, or you already own one, you should be aware that Spain is reintroducing its Wealth Tax with effect from 31 December 2011.

Wealth Tax is a tax that is imposed on the capital value of your assets, whether they produce income or not. If you are resident in Spain, you will pay Wealth Tax on your worldwide assets. If you are not resident in Spain, you will only pay Wealth Tax on your Spanish assets. Broadly speaking, you will be considered resident in Spain for tax purposes if you spend more than half the year in Spain.

If your assets – in Spain or worldwide, as the case may be – are worth more than €700,000, you will have to pay the new Wealth Tax. The rates of tax range from 0.2% to 2.5%. There is a partial exemption for the value of your home, so even if you live in Spain you may not have any Wealth Tax to pay at all.

The Wealth Tax, or Impuesto Sobre El Patrimonio, was suspended with effect from 2008. In September the Spanish government announced that the suspension would be lifted for two years. The first tranche of Wealth Tax is payable on assets you may hold at 31 December 2011.

France also imposes a Wealth Tax, but in contrast to Spain its minimum asset threshold was recently raised to €1.3m. There is also a partial exemption for those who have become resident in France within the last five years.

In summary, owners of French or Spanish property worth close to or more than the thresholds would be well advised to seek proper, professional advice, as would those considering buying such property. Having said that, whilst tax is a consideration it should not be a reason not to buy!

Rachel Finch is a tax partner at Burton Sweet chartered accountants, specialising in international tax. If you would like to contact Rachel, please email us at enquiries@w-wideproperty.com and we will put you in touch.

House prices have been holding steady now for around 2 years against the backdrop of some of the most volatile economic conditions that any of us can remember. This is quite a remarkable achievement given what has happened to house prices in previous economic downturns and is testament to the incredible safety and security that property offers to investors right now.

Even during past economic downturns property has fared rather well as an investment. Sure, prices have fallen but never by 100% as with many stocks and shares. And of course with property, even if the price does fall you still have the original tangible asset.  This provides future growth, thus quickly recouping any losses and then moving further into profit; and what a profit!!! Just look at the last decade to get an idea.

Anyway, this got me thinking. How has the last decade compared to previous decades? So I downloaded Nationwide’s house price data right back to when their records began in 1973, and here’s what I found.

In 1973 the average house price according to the Nationwide house price index was £9,767. Did you or your parents buy a house back then?

Leap forward to 2011. According to the index that average house is now worth £166,597. That’s an increase of 1,600%. Not bad eh? If someone buying the average house back in 1973 had done so with the average mortgage loan to value of 85%, the deposit required would have been £1,465. In other words (taking interest rates out of the equation for the sake of simplicity), an investment of £1,465 has returned £156,830 and provided a home in which to live. Can you think of another investment that can provide this?

So let’s break the average house down into 10 year periods. As the records start at 1973 we’ll use an 8 year period to get us started. In this 8 years house prices rose 143%. In the next 10 years they rose again, by 130%. In the following 10 years (and this covers the recession of the early 1990’s) they rose by 54%, and in the 10 years to date guess what? They rose further by 93%. There’s a pretty interesting pattern here wouldn’t you say?

So let’s look ahead. Assuming this pattern repeats itself (and I certainly don’t know of anyone who thinks otherwise) the average house price in 38 years time could be a cool £2.7m.  Once again, if you base this on an initial deposit of 15% (£24,989), and take interest payments out of the equation for simplicity, the return would be just over £2.5m.  Now who wouldn’t be interest in an investment like that?