UK buyers looking to buy property in the Austrian Alps are asking lots of questions but not being put off by a potential Brexit.
According to a recent survey conducted by A Place in the Sun, 70% of Brits say that Britain leaving the EU would not prevent or even postpone their plans to purchase a second home in Europe.
The effect of a Brexit and the free movement of capital from the UK to the European Union is likely to be minimal for a number of reasons.
Here are some of the key questions and answers from UK buyers.
If I buy now and we Brexit, what happens with my ownership rights as non-EU citizens cannot personally buy in Austria?
This is not quite true. Non EU-citizens can buy property in Austria.
The right to buy or own property in the EU by a Brit is not going to be materially diminished, whatever happens.
Should we vote to leave the EU in June 2016 (40% probability according to HSBC and UBS) it will take at least two years for the exit to take effect, during which time you retain the same rights as any EU citizen.
Furthermore, there are 1 million Brits who own properties in the EU and lots of EU owners here, so it is extremely unlikely that the host countries will suddenly impose restrictions.
Swiss or Norwegians have not been penalised and there are lots of Americans, Russians and Chinese with property in Europe.
In any event, you can opt to buy property through a limited company which has a registered office inside the EU and it is no longer necessary for the shareholder or ultimate beneficiary to be a European citizen.
Will the double tax treaty with Austria still be in place if we Brexit or could I end up paying tax on my rental income twice and future capital gains etc?
A Brexit would have no impact on the UK’s extensive double tax treaty network, which is not based on EU membership.
The double tax treaties we have signed with EU countries will remain unaffected because the agreements to ensure people are not taxed twice on the same money are made individually with each country.
Should I buy now or wait in case we don’t Brexit and the exchange rate gets better?
The Sterling / Euro exchange rate will see some fluctuation between now and June depending on the polls but the cost of a Brexit has been mostly factored into the equation by the large institutions.
For added security buyers can lock in today’s exchange rate for the next two years by paying a deposit of 5 to 10% now. Our Forex partner can assist with this.
Should I take out an Austrian euro mortgage or a UK mortgage?
European banks have strong lending divisions that have created mortgage products aimed at UK buyers and these will continue even if Brexit happens.
Austria welcomes British buyers who invest in their tourist destinations and even after Brexit, a British buyer would find it easy to get a mortgage in Austria.
Kristall Spaces apartments come with a rental obligation when owners are not using the property and local tax authorities waive the 20% VAT on the purchase in return for your agreement to rent the property and support the growing numbers of visiting tourists to the resort (40million people per annum).
The status of a rental property means your apartment is classified as a going concern and the rental income in Euros can be used to pay down your Euro based mortgage, which acts as a hedge against any future exchange rate fluctuation.
Kristall Spaces has negotiated a very reasonable tax package with an Austrian accountancy firm specialising in tourism residences.
You can engage the tax advisors at the time of purchase.
They will register you for VAT in Austria, advise you on tax issues during the purchase process and handle your VAT and Tax returns in the future.
Still unsure or want to discuss other aspects with us? Please contact us today.