Hi All,
I am looking for anyone to help me. I am planning on buying a flat in Naantali early next year (as soon as possible really). I have got in touch with an estate agent and he has sent me some schedules to look at and I like what i see. I live permanently in Glasgow in the UK and will not be moving to Finland.
Are there any tax implications I need to consider, or any other pitfalls or things I should be aware of. Or do i just need to sort out the finances (which i understand I can do either here in the UK or in Finland) and buy the property? Also would anyone know if it is better to get a mortgage in Finland or the UK? Any help on directing me to any good Finnish banks so I can ask them how to proceed would be very helpful too.
No doubt i will think of more questions but if anyone can help me so far that would get me started.
Thank you so much,
Anthony
Help Needed - buying a flat in Naantali
I've understood from talking to the Inland Revenue before that you're taxed wherever you are permanently resident. Therefore, any rental income you get from the flat in Finland will be liable to tax in the UK under the UK rules.
There's stamp duty to pay (called 'transfer tax') on buying a property, although it's waived for first-time buyers. As you're buying a flat, you're actually buying shares in a housing association, so the stamp duty rate is 1.6%. You perhaps need to check if you'll have to pay the stamp duty given that you won't be living here.
You'll have to pay a monthly service charge on the flat to cover heating, gardening, general maintenance and the like. Also, if the group of flats (the housing asscotiation) decide on any renovations to the block e.g. windows, external painting etc, you'll have to pay your share. For flats built in the 1950s or 60s, a lot are due to have major plumbing and electrical work done about now (putkiremontti) and that can be VERY expensive, so it's good to check if that's been done or will be coming up in the next few years.
As for banks, interest rates are lower here than in the UK. I might be wrong on this, but at least I would guess that it would be difficult to get a mortgage here in Finland if you don't live here. There's always a greater risk lending to someone who's not physically present in the country. Perhaps somebody else might have managed this though?
There's stamp duty to pay (called 'transfer tax') on buying a property, although it's waived for first-time buyers. As you're buying a flat, you're actually buying shares in a housing association, so the stamp duty rate is 1.6%. You perhaps need to check if you'll have to pay the stamp duty given that you won't be living here.
You'll have to pay a monthly service charge on the flat to cover heating, gardening, general maintenance and the like. Also, if the group of flats (the housing asscotiation) decide on any renovations to the block e.g. windows, external painting etc, you'll have to pay your share. For flats built in the 1950s or 60s, a lot are due to have major plumbing and electrical work done about now (putkiremontti) and that can be VERY expensive, so it's good to check if that's been done or will be coming up in the next few years.
As for banks, interest rates are lower here than in the UK. I might be wrong on this, but at least I would guess that it would be difficult to get a mortgage here in Finland if you don't live here. There's always a greater risk lending to someone who's not physically present in the country. Perhaps somebody else might have managed this though?
The stamp duty/transfer tax is only waived if you are going to be moving into your house, as you say you are not moving to Finland remember to take the costs of it into account.
My wife and I bought our house 10 months prior to moving here permenantley and we were both stil working in the UK, we arranged our mortgage through osuupankki and it was quite easy, we also capped the interest rate for 7 years to about 4.8% this cost an extra 1000 euros but we felt it was worth doing.
My wife and I bought our house 10 months prior to moving here permenantley and we were both stil working in the UK, we arranged our mortgage through osuupankki and it was quite easy, we also capped the interest rate for 7 years to about 4.8% this cost an extra 1000 euros but we felt it was worth doing.
I think you will have to pay real estate tax to Naantali municipality (similar to what you call the rates in the UK):
http://www.vero.fi/default.asp?language ... RO_ENGLISH
I guess the tax issue is the most important one. If you decide to rent the property out and you want to off-set interest payments against your unearned income (... can you do that in the UK???) then maybe the mortgage has to be in the UK too... not sure.
Also, if you intend to rent the place out on a long term let, check through rental agreement legislation. I think you will find there are some differences between the UK and here. Someone has already posted all the links.... try using the search engine, I'm sure you'll find the info easily.
http://www.vero.fi/default.asp?language ... RO_ENGLISH
I guess the tax issue is the most important one. If you decide to rent the property out and you want to off-set interest payments against your unearned income (... can you do that in the UK???) then maybe the mortgage has to be in the UK too... not sure.
Also, if you intend to rent the place out on a long term let, check through rental agreement legislation. I think you will find there are some differences between the UK and here. Someone has already posted all the links.... try using the search engine, I'm sure you'll find the info easily.
Initially plans are just to have the flat as a place to stay when I am in Finland, which currently is once a month for 4 or 5 days. No plans, just yet, to rent it.
If, as time goes by it makes more sense to rent it when i am not there I can look into that then. So i presume these tax issues, won't be an issue if this is the case.
If, as time goes by it makes more sense to rent it when i am not there I can look into that then. So i presume these tax issues, won't be an issue if this is the case.
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Hank W.
- The Motorhead
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Well, if you take it as an investment... Naantali is a "summer city" so real estate does get silly prices (as in houses); if you can get 2-rooms or such you could always get the other room scalped to the summer workers. Requires a bit of planning though.
Cheers, Hank W.
sitting here like a lemon looking for a gin.
sitting here like a lemon looking for a gin.
Are you sure about this? My understanding is that you only have to consider paying real estate tax directly on detached houses (omakotitalo).penelope wrote:I think you will have to pay real estate tax to Naantali municipality (similar to what you call the rates in the UK)
I'm pretty certain that if you're buying a flat and therefore shares in a housing association, as AnthonyP is going to do, the real estate tax charge for the association (yhtiö) is included in the monthly service charge (hoitovastike) for the flat.
I've owned a flat here (i.e. shares in the association) and the monthly service charge covers external upkeep, gardening, rubbish disposal and other bits and pieces like real estate tax.
In your case AnthonyP, I don't think that you'll have to deal with real estate tax, except indirectly when you pay the service charge, and you will be told how much that is anyway - you won't have to do your own calculations.
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Hank W.
- The Motorhead
- Posts: 29973
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Yes, AnthonyP - read the bloody stickies up there, especially about "buying a flat". You buy shares in a company that entitle you to occupy a space within the company walls. So you can't paint your door blue - as it is a company door, and not "your" door. And a separate house can be a "flat" ; it depends on the incorporation. Blocks and detacheds are always "flats" with shares.
Cheers, Hank W.
sitting here like a lemon looking for a gin.
sitting here like a lemon looking for a gin.