Financing Overseas Property Purchase

Barbara Bunter

Registered User
Messages
24
Hello,

We are starting to look at options in terms of buying a house in the Algarve. Some of the ones we've seen are owned by companies...does anyone know why that's the case? And what are the banks like these days in terms of lending?

We are looking to buy somewhere bigger to use now but also with an eye on splitting our time between here and Ireland in retirement.

Thanks.
 
Hi Barbara,

Villas in Portugal tend to be owned through corporates at the €1m+ level because of the cost/benefit. It’s for tax reasons, and the level of tax concession depends on where the company is based. From memory, ‘white list’ countries are the best (e.g. Malta). ‘Black list’ countries are tax-haven type places (e.g. the Isle of Man, British Virgin Islands, etc). Again, from memory because it’s a while since I looked at this, any gain on disposal is exempt from CGT, and the purchase is exempt from IMT tax (6-8%) plus stamp duty (circa 1%).

I think the running costs of the company are around €3k a year.

In terms of bank lending, you have to put down at least 30% and banks will usually lend out to age 70. The typical rate is around 1.75%.

Gordon
 
Hi Barbara,

Villas in Portugal tend to be owned through corporates at the €1m+ level because of the cost/benefit. It’s for tax reasons, and the level of tax concession depends on where the company is based. From memory, ‘white list’ countries are the best (e.g. Malta). ‘Black list’ countries are tax-haven type places (e.g. the Isle of Man, British Virgin Islands, etc). Again, from memory because it’s a while since I looked at this, any gain on disposal is exempt from CGT, and the purchase is exempt from IMT tax (6-8%) plus stamp duty (circa 1%).

I think the running costs of the company are around €3k a year.

In terms of bank lending, you have to put down at least 30% and banks will usually lend out to age 70. The typical rate is around 1.75%.

Gordon

Thank you...that is most helpful!
 
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