Should International property investors stop investing in the UK because of its adverse tax rules?
It is undoubtedly true that the many tax changes which have been introduced over the past few years, especially combined with the high rates of Stamp duty, have made the UK seem much less attractive for international investors. Indeed many international investors (especially those from the Middle East) might be considering New York as an alternative property investment jurisdiction.
It is important, however, that investors take account of all property taxes together with the associated costs of the purchase and sale. Headline tax rates are often lower in the US but investors need to take into account
a) State Income Taxes
b) the realtor fees which are typically charged on both the seller and buyer and
c) annual local property taxes – for properties owned for the medium or long term the higher rates applying in NY will act to make the UK seem more attractive.
Taking all these factors into account, and despite all the tax changes, London residential property continues to appear to be attractive.
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