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Real estate is one of the soundest investment opportunities we have, and it’s also one that more people are considering as time goes by. However, a new trend that’s being observed is an overseas investment. We’re no longer limiting our profit potential to our own backyards.
With that in mind, you may be curious whether there are any rules for investing in real estate overseas. You probably won’t be surprised to learn that there are many, with the following five being the most important:
Requesting Expert Help
Whether you’re looking at property investment in Melbourne, Dubai, or Cancun, a number of extra considerations arise when investing overseas. As a result, requesting expert help can be crucial.
You may have the capital to invest in a new commercial or residential building, but that doesn’t mean you have the necessary knowledge to understand when the markets are hot and which areas present more opportunities than others.
Property experts can even alert you to your tax requirements, visa requirements, and any problems you may encounter while trying to invest outside of your own country.
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Spending Time Where You’re Buying
It doesn’t matter where you are in the world – there’s value in spending time in the place you’ve identified as having purchasing potential. By visiting, you can gain insight into the area’s culture, what the locals value, and how profitable investment property in that area would really be.
Properties can look entirely different in real life compared to what shows on paper, so you may not truly understand what you’re getting yourself into until you see the area in person.
Understanding Foreign Land Ownership Rules
Every country’s foreign land ownership rules are different, so it’s never safe to assume that what applies to one country will apply to another. Some have strict rules for non-resident purchases, while others – like the US – rely on it as a major source of income.
If you’re not familiar with how these rules and regulations will work in your situation, it may be in your best interests to align yourself with property experts who can guide you through the purchasing process.
Knowing Your Tax Obligations
In nearly all countries, tax is applied to the use, ownership, and transfer of property. Ignorance is not an excuse for not meeting your tax obligations, so make sure you’re aware of them before investing in real estate in a country other than your own.
For example, property taxes in Australia are known as council rates and are municipal taxes levied by local governments. The average Australian household pays around $1,300 in property taxes per annum.
As of 2020, the average American single-family home pays approximately $3,719 annually, with an effective tax rate of 1.1%. Italy’s tax obligations are even more wide-ranging, with taxes ranging from 0.4% to 0.7% of the fiscal value, depending on the property type and location.
Given the wide scope of variation, it’s worth having a local tax agent on your side to ensure you understand every aspect of your obligations.
Learning Your Financial Obligations
Each country has its own laws around foreign ownership, and they often require foreign investors to pay a larger deposit and higher interest rate for the privilege. Even if a property price seems competitive and within your budget, it may be worth keeping this information in mind before signing on the dotted line.
Branching out from buying close to home is a significant decision to make, and it’s not one to take lightly. Learn all about overseas investment rules and regulations to make informed and confident choices.
