Many expats are tempted to invest in property in their new country. Perhaps they plan to live there permanently or they see it as a more sensible alternative to renting. Many people buy because they plan to return one day when they are retired or they see the country as an ideal holiday getaway to return to after their travels. After all, who wouldn’t want to own property in the Bahamas or the Cayman Islands?
Before you decide that buying makes perfect sense, make sure you tick the following boxes:
Buying property abroad checklist for expats:
Sufficient local knowledge
Do you know enough about the area you are buying into? Yes, your home might look perfect today, overlooking a pristine blue ocean. But what happens during the winter storms? Are you liable to be flooded? Is the area considered a good investment? What are the local schools and universities like? All these factors need to be considered before you buy property. Try to connect with other local expats who have bought in the area. They have already been through the process and they’ll be able to guide you about the areas and give you tips on what to avoid.
An understanding of the country’s property laws
In some countries, foreigners cannot own the land. Essentially they ‘lease’ it from the government for periods of up to 100 years. This is something to consider if you are planning on buying a home and passing it onto your children. In France, the children inherit the house and not the spouse unless it is specified. In some countries if a home has unpaid electricity or water bills, you can become liable for them as the new owner. So before you dive in and buy, engage a local lawyer you trust to take you through all the aspects of purchasing a local property.
If you plan to buy a property and then rent it out, ensure you have done your homework to guarantee your rental will cover your mortgage or bond. It’s best to consider the worst-case scenario when looking at rentals as many countries go through periods of booms when rentals are in short supply and prices escalate and conversely drop when there are lots of properties on the market.
Thoroughly understand the local tax laws
Before buying property, consult with a local tax specialist to ensure you have a thorough understanding of your tax liabilities. Your foreign property could increase your tax bracket in your home country or make you liable for capital gains tax. In certain countries, you need to pay land tax as part of your mortgage.
Owning a second home in a foreign country often sounds wonderful in conversation, but before you have considered all the aspects of what becoming an expat property owner entails, don’t dive in and sign on the dotted line.
If you’re busy planning on immigrating abroad and need advice about your financial migration, contact us today and we’ll help you on the path to financial freedom in your new home.
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