Things to consider on offshore real estate investments

In today’s turbulent economic conditions, investors might seek to diversify their investment portfolios by purchasing real estate abroad.
While this can be a good investment strategy, there is a host of laws and regulations that apply to foreign purchases. Buyers will need to familiarise themselves with these regulations before going ahead with a purchase.
The first step is to research the country in which you hope to invest to find out if they even allow foreigners to purchase property. Some countries will place restrictions on foreign investment into the local housing market, usually owing to a limited supply of homes. Other countries might only allow those who become permanent residents to purchase property in the country.
On the other hand, some countries will offer permanent residency to those who purchase real estate in the country. “Portugal offers permanent residency for those who purchase property, so does Greece and there are others that do the same. Portugal is with an investment over 500K euros and Greece is over 250 euros,” explains Chip Brekken, Director of Global Development for RE/MAX LLC.
Local tax laws
The next topic to research is the tax laws that would apply in that country depending on how you plan to use the property. “When purchasing abroad, you will have to pay capital gains if you have investment income,” says Brekken. To avoid double taxation, it is advisable to read through the Double Taxation Agreements section of the respective countries.
Those who need financial assistance to purchase foreign real estate may find it tricky to secure the necessary funding.
“In the US, for example, you can acquire a home loan but typically only if you have a brokerage account with an international financial institution and you can only qualify for a certain amount – usually around 50%. As a US citizen, you can finance as much as 97%, but a foreigner would not be allowed to do that much,” says Brekken.
As a final step, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, recommends chatting to a real estate advisor who has global connections and can put you in touch with somebody who knows more about the local market in which you plan to invest.
“Lean on the advice of agents from a reputable global brand such as RE/MAX and avoid making any long-term investment decisions until you have a more thorough understanding of the local property market. If you plan on immigrating, rent for a few months and explore the surroundings before you decide on where to purchase a permanent home,” Goslett concludes.