While some travelers romanticize living in a country as they experience the people and culture, others have the opportunity to make those dreams a reality. Those who take steps to own property internationally must undergo serious research and seek advice.
Potential investors and those who wish to move abroad should act cautiously before purchasing a foreign property.
1. Follow local real estate practices.
Each country has its real estate practices and regulations. Due to these differences, the standard practice is to hire a team of professionals to help with foreign property purchases. Typically attorneys, notaries, interpreters and real estate agents become involved in the property search and subsequent sale.
2. Review residency rules.
Sometimes, buying property or investing a certain amount of money in a country is a way for people to establish residency. For example, this applies to many European countries like Montenegro.
Additionally, depending on how the buyer intends to utilize the property (either residential or commercial), they must understand local zoning rules. Zoning laws govern property use in certain areas. Violating zoning laws can lead to penalties, including severe criminal charges in some areas.
3. Understand associated tax issues.
Those living and working abroad must report their income to the Internal Revenue Service. If the taxpayer pays income tax in the host country, they likely can claim a foreign tax credit to offset their United States income tax. Also, U.S. tax law typically does not require the inclusion of the purchase of international real estate. Due to this nuance in tax benefits and liability, it is also important to work with a tax professional who is proficient in domestic and foreign taxation.
Adequately preparing to buy property overseas may help people and businesses avoid scams and get what they want.