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Selling Property

If you own property (real estate) the time is likely to come when you or your heirs are going to want to sell it.

You are then likely to have 3 main concerns. You want to maximise the amount that you receive for the property. You want to make sure that your money is safe and you want to make the whole transaction move a quickly as possible.

The lawyers and other professionals who are the members of The International Law Partnership Ltd. can help you achieve all three of these aims.

Maximising the amount that you receive

This task, in turn, breaks down into three parts:

Getting the most for your property

You are not likely to be very familar with the property market in the country in question and you are likely to need an estate agent (realtor) to help you sell the property. Choosing the right realtor can make a big difference when it comes to the amount that you will be offered for the property. Some are just much better than others when it comes to finding buyers and negotiating the best price with them.

The lawyers who are the members of The International Law Partnership Ltd. will be able to recommend suitable estate agents/relators to you.

It is worth mentioning in passing that we are often asked whether it is necessary to use a realtor or an estate agent when selling a property abroad. The estate agents' fees can amount to a lot of money. Of course, it is not necessary to use an estate agent. You are free to sell the property yourself. However, in our view, using a good estate agent is likely to save you money and not cost you money. This is because they are likely to obtain a better price for the property than you would obtain on your own. It is also worth mentioning that, especially if you live outside the countryy, you will need to make some secure arrangements for people to be shown around the property. Once again, a good estate agent is normally your best choice for this task.

Minimising your tax obligations

There is no point in being paid a lot of money for the house if you have to give it all to the tax man. Good tax advice (taking into account the tax rules in the country in question and in your own country) can reduce your tax bill enormously. You should ask the lawyer who is dealing with the transaction for you to give you or introduce you to someone who can give you - detailed advice as to what can be done in your personal circumstances.

Minimising the expenses of the sale

There are certain expenses connected with the sale of property (notaries fees, property transfer tax etc.) which can be paid either by the seller or by the buyer, depending upon the terms of the contract agreed between them. It is, obviously, better for you if as many as possible of those costs can be made the responsibility of the buyer. Once again, ask your lawyer for advice as to what can be done in your case.

Making sure your money is secure

At the moment, you have the security of owning real estate. When you exchange that for cash it is important to make sure that you actually receive the money! This may seem obvious, but it doesn't always happen. If you are paid for the property by way of a cheque that bounces you may find it difficult or impossible to recover the money due to you.

There are various mechanisms used regularly to make sure that you do actually receive the money. Ask your lawyer for advice.

Making the transaction move as quickly as possible

All of our clients would like to agree a sale today and receive the money tomorrow! Of course, this isn't going to happen but the transaction can be made to progress much more quickly than would normally be the case.

The first key to this is preparation. If you know that you are going to sell the house, ask your lawyer to deal with the case in good time - well before you have actually found a buyer. This will allow the lawyer to gather together any documents that might be necessary and produce a draft contract. He will then only need to add the name and address of the proposed buyer, so saving quite a lot of time.

In many cases, you will only be able to export the money that you receive for the property once you have complied with certain formalities. One of those formalities is, often, producing proof that you have paid all of the tax that you owe to the government of the country in question. A lot of time can be saved by producing all of your tax paper work well in advance of the sale. If the taxes can be paid at that stage, this is the best solution, but if you are dependent upon the sale of the property to pay the taxes, just having the paper work pre-prepared and ready for submission will save you time.

Using an experienced lawyer and a good estate agent will both lead to the buyer and his advisors being kept under pressure to complete the transaction as quickly as possible.

Once I have sold the property, can I take the money out of the country?

Provided you or the person who bought the property imported the price into the country in the proper way then you will be able to export the amount that you receive when you sell it less, of course, any taxes due to the government.

In order to do this there are certain exchange control formailities to be complied with. Your lawyer will deal with this on your behalf.

What taxes will I have to pay when I sell the property?

Taxes in the country where the property is located

You will, in most cases. have to pay tax to the government of the country where the property is located on the profit that you make when you sell the property. This is calculated on the basis of the difference between the price paid for the property and the price for which you sell it. There are, often, certain deductions and allowances that you can set off agains the profit that you make. In some countries, if you have owned the property for more than a cedrtain number of years, the profit will be tax free in that country.

Taking advice on your likely tax liabilities at the outset of the sale process can allow for some tax planning and, hopefully, some significant tax savings. However, it is fair to say that the best opportunities for saving tax when you sell your propertry occured long ago - when you bought it!Once you have calculated the amount of any taxable profit you will pay tax on that amount at the prevailing rate. Your lawyer will arrange for the payment of these taxes.

Taxes in your own country

You are likely also to have to pay tax on the profit that you have made in your own country and/or in the country in which you currently live.

Whether you will have to pay and how much you will have to pay depends entirely upon the tax rules in that country.

For example, if you are British and living in the U.K. you will need to declare the profit that you have made to the U.K. tax authorities. The amount of that profit will be determined by the U.K. rules. As a result, the profit, as calculated for the purposes of the tax authorites in the country where the property is located, may well be different - sometimes substantially different - from the profit as calculated in the U.K.

There is a double tax treaty between the U.K. and most countries. If there is such a treaty, you do not end up paying the same tax twice. Under the terms of that tax treaty (although these vary fronm country to country) you will usually be entitled to deduct from your tax obligation in the U.K. the full amount of the tax that you have already paid abroad in connection with the same transaction.

Many other countries, including the United States and Ireland, operate similar rules.

The lawyers, accountants and other professionals who are the members of The International Law Partnership Ltd. will be pleased to advise you not only about your tax liabilities abroad and your own country but also about how to minimise those liabilities.

How much does it cost to sell a house?

This will vary a lot from case to case, mainly as a result of the differences in value between the properties.

Typically, you will have to pay an estate agent 3% -5% of the price obtained for the property. You will have to pay the lawyer who is the member of The International Law Partnership Ltd. in the country, typically, 1% of the price of the property, subject to a minimum. There may be miscellaneous other minor expenses. You will also, of course, have to pay your tax obligations as described earlier in this guide.

Next steps

Please look at the Legal Guides, videos, MP3 seminars and other materials set out to the right of this page.

If you would like us to help you, please complete our Client Pack and send it back to us. We will contact you to clarify your requirements and then introduce you to the person most appropriate to deal with your case.

If you do not find the information that you need, please send us an email explaining your problem and we will contact you.

© The International Law Partnership Ltd. Page last revised 8th February 2010.

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