Buying Property in Offshore and Low-Tax Jurisdictions: A Guide for International Investors

The phrase "offshore property" encompasses a wide range of jurisdictions, from Monaco's ultra-prime apartments to Caribbean islands whose real estate markets range from modestly priced holiday homes to ultra-luxury private compounds. What most of these locations share is a benign local tax environment — no capital gains tax, no local property tax, low or zero stamp duty — and, in many cases, a highly desirable lifestyle proposition.

For UK nationals and internationally mobile high-net-worth investors, purchasing property in these jurisdictions can be attractive, but it requires careful planning. The local tax advantages do not automatically translate into UK tax advantages — UK residents and domiciliaries remain subject to UK tax on worldwide income and gains, regardless of where assets are held. This guide sets out the landscape for the most popular offshore property markets and addresses the UK tax framework that applies.

Monaco

Monaco is the most expensive real estate market in the world by price per square metre, typically exceeding €50,000–€60,000 per square metre for prime properties. A 35–40 square metre studio apartment can cost €2–2.5 million; a luxury apartment with sea views will be multiples of that.

Purchase rules: Foreign nationals may purchase property in Monaco freely, subject to the standard conveyancing process involving a notaire. There are no restrictions based on nationality.

Local taxes: Monaco levies no income tax on residents (other than French nationals, who remain subject to French income tax under the bilateral treaty). There is no capital gains tax on property disposals. A one-time registration tax of approximately 4.5%–6% applies on purchase. There is no annual property tax.

Ownership structures: Property in Monaco is frequently held through a Monaco or offshore company (a SAM — Société Anonyme Monégasque — or a similar structure). This can simplify succession and provide privacy in the title register.

UK tax treatment for UK residents: A UK resident who purchases a Monaco apartment is buying an asset with its situs in Monaco. For income tax purposes, rental income from a Monaco property is taxable in the UK as overseas property income (the overseas property business rules under ITTOIA 2005; the old "Schedule A" terminology no longer applies). For capital gains tax, a disposal creates a UK CGT liability on the gain, after any applicable double tax credit (Monaco has no CGT, so there is no local tax to credit). For IHT, a long-term UK resident's Monaco property is part of their UK IHT estate — the absence of local IHT does not protect the asset from UK IHT on death (UK IHT on worldwide assets is residence-based from 6 April 2025).

Cayman Islands

The Cayman Islands luxury real estate market — concentrated in Grand Cayman — has grown substantially, driven by the large financial services community and demand from international buyers seeking a low-tax Caribbean base.

Purchase rules: Foreign nationals may purchase property in the Cayman Islands subject to a Cayman Islands work permit or residency permit for those who intend to live there. For investment or holiday use, purchase is generally straightforward. The government introduced a residential development plan in the 1990s that designates certain areas as "resort areas" where foreign ownership is simplified.

Local taxes: No income tax, no capital gains tax, no inheritance tax, no annual property tax. Stamp duty on purchase is 7.5% of the transaction value — a significant cost that should be factored into investment return calculations.

Rental income: Income from rental of Cayman property is not taxed locally. However, for UK resident and domiciled owners, the income is taxable in the UK as overseas property income.

Ownership structures: Cayman property is commonly held through Cayman registered companies (exempted companies) or through BVI holding companies. A Cayman company holding the property changes the asset's situs from Cayman real estate to shares in a Cayman company — with implications for how the asset is transferred on death and how it is treated for UK IHT purposes.

Bermuda

Bermuda imposes significant restrictions on foreign property ownership that are unusual among low-tax jurisdictions. Foreign nationals (non-Bermudians) may generally only purchase property in designated areas:

• Properties valued above a prescribed threshold (currently around BMD $2.5 million for residential property — subject to change)
• Properties in designated tourism development areas

These restrictions exist to protect local Bermudian access to housing. The effect is that the overseas property market in Bermuda for non-Bermudians is concentrated at the high end.

Local taxes: No income tax, no capital gains tax. Annual Land Tax applies based on the annual rental value of the property — rates vary by assessment band. Stamp duty on property transfers applies at graduated rates.

Rental income: Bermuda does not tax rental income locally for overseas owners. UK owners remain subject to UK tax on overseas property income.

British Virgin Islands (BVI)

The BVI real estate market is smaller and less liquid than Monaco or Cayman but attracts buyers seeking privacy, natural beauty, and a genuinely offshore lifestyle.

Purchase rules: Foreign nationals may freely purchase property in the BVI. No restrictions on foreign ownership apply to most property types. A Non-Belonger Land Holding Licence may be required for residential property purchases by non-BVI residents.

Local taxes: No income tax, no capital gains tax. Stamp duty on property purchase by non-residents is higher than for residents (around 4% for BVI residents; up to 12% for non-residents in some categories — the specific rates should be confirmed with local counsel as they change). There is no annual property tax.

Ownership structures: BVI property is sometimes held through a BVI Business Company (a BVI BC), which can simplify transfer on death (transfer of company shares rather than re-conveyance of land) and reduce stamp duty on subsequent transfers. The company is incorporated in the BVI, has no tax payable locally on its income, and its ownership can be held through further tiers of offshore structure if privacy or succession simplification is a priority.

UK Tax Treatment of Offshore Property: The Key Principles

For UK residents (and, for IHT, long-term UK residents), the absence of local tax in the jurisdiction where the property is located does not translate into absence of UK tax. The following principles apply regardless of where the property is located:

Land is Sited Where it Physically Stands

For UK tax and succession law purposes, land and buildings are located where they are physically situated. A Monaco apartment is a Monaco asset. A Cayman villa is a Cayman asset. However, shares in a company that holds that property are typically sited in the jurisdiction where the company is incorporated — which changes the analysis for some purposes.

This matters for:

• IHT: a long-term UK resident's overseas property (held directly) is included in their UK IHT estate at full value — there is no excluded property relief for property held directly (since 6 April 2025, the UK IHT charge on worldwide assets is based on long-term UK residence rather than domicile)
• CGT: a UK resident's disposal of overseas property is subject to UK CGT on the gain — the absence of local CGT means there is no overseas credit to set against the UK liability
• Income tax: overseas rental income is subject to UK income tax as foreign property income — any local tax actually paid can be set as a credit

Company Ownership: Does It Change the Analysis?

Holding offshore property through an offshore company changes the situs of the asset for some purposes but not others:

For IHT: shares in an offshore company that holds property are shares in a non-UK company. The situs of shares is typically the place of incorporation. Since 6 April 2025, UK IHT is no longer based on domicile but on residence: an individual is within the scope of UK IHT on their worldwide assets once they are a "long-term UK resident" — broadly, UK resident in at least 10 of the previous 20 tax years. Under the excluded property rules, non-UK situs assets (such as shares in a non-UK registered company) can be excluded property where the owner is not a long-term UK resident.

For a long-term UK resident holding shares in a BVI company directly (not through a trust), the shares are not excluded property — they are in the UK IHT estate.

For an individual who is not yet a long-term UK resident (for example, a recent arriver within the four-year Foreign Income and Gains regime), shares in an offshore company holding non-UK property can be excluded property and outside the UK IHT estate. This is one reason why pre-arrival structuring — putting non-UK assets into an offshore holding company before becoming a long-term UK resident — can be relevant. (Note that under the residence-based regime, "excluded property" status can be lost once long-term UK resident status is acquired, and protections for assets settled into trust were significantly changed from 6 April 2025; specialist advice is essential.)

For CGT: disposing of shares in a company that holds property is not the same as disposing of the property directly, but UK CGT still applies to the gain on disposal of the company shares for UK residents.

For income tax: dividends from an offshore company that holds a rental property may be taxed differently from direct rental income — but anti-avoidance rules (including the transfer of assets abroad legislation) can attribute the income of an offshore company to its UK-resident owner in certain circumstances.

Rental Income Reporting to HMRC

UK residents who receive rental income from overseas property must:

• Report it on their UK Self Assessment tax return each year
• Claim any allowable expenses (mortgage interest on a restricted basis post-Section 24, repairs, management fees, local taxes)
• Claim a credit for any local tax paid
• Consider whether the rental activity is a property business or isolated letting (affects the loss relief rules)

There is no equivalent of the UK Non-Resident Landlord Scheme for overseas property — HMRC does not interact directly with the overseas property management. The obligation to report falls entirely on the individual.

Non-Resident CGT on UK Property: A Relevant Contrast

It is worth noting the contrast for completeness. While UK residents pay CGT on disposals of overseas property, non-UK residents who own UK residential property have been subject to Non-Resident CGT (NRCGT) since April 2015. A non-UK resident selling UK residential property must:

• Notify HMRC within 60 days of completion
• Pay any NRCGT liability within the same 60-day window
• File a UK Self Assessment return for the year if not already required to do so

There is no equivalent 60-day reporting obligation for UK residents disposing of overseas property — but the CGT liability arises and must be reported in the annual Self Assessment return.

Practical Guidance for Potential Buyers

Before purchasing property in an offshore jurisdiction, internationally mobile investors should:

1. Obtain local legal advice in the jurisdiction of purchase — conveyancing processes, title registration, and foreign ownership rules vary materially between jurisdictions
2. Review the UK tax position with a UK tax adviser — CGT, income tax on rental income, and IHT exposure all need to be assessed
3. Consider the holding structure — direct ownership, company ownership, or trust — and get advice on which best serves your succession and IHT objectives
4. Factor in all acquisition costs — stamp duty, legal fees, registration fees, and ongoing costs (management, local taxes, insurance) into the investment return calculation
5. Understand the exit — liquidity in offshore real estate markets varies enormously; the Cayman market is much more liquid than the BVI market, and Monaco is deep but very high-value; exit timescales and disposal costs need to be planned

How Global Investments Can Help

Global Investments advises HNW clients on investment property decisions across multiple international jurisdictions. We can help you assess the investment merits of offshore property acquisition, understand the UK tax implications of different ownership structures, and connect you with specialist local lawyers in the relevant jurisdiction.

We work with clients who hold property portfolios across Monaco, the Caribbean, Europe, and the Middle East, and we understand how these assets fit into the wider estate planning and wealth structuring picture.

This guide is for general information only and does not constitute legal or tax advice. Purchase rules, local taxes, and UK tax treatment of overseas assets change regularly and depend on individual circumstances. You should obtain specialist advice in both the jurisdiction of purchase and your country of tax residence before making any overseas property investment. The value of property investments can fall as well as rise.