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USWhat are the key considerations when investing in foreign property?
The Aussie dollar has recently made a significant comeback against the US dollar. This change could make it easier for Australians to buy property overseas, but with increased opportunity comes risk and exposure to currency markets. Whether you’re interested in a retirement patch, a holiday home or a lucrative investment, you’ll want to avoid spending more money than necessary during the settlement and as you continue to maintain it.
From tropical islands to sprawling mega cities there are some important things to consider when seeking an investment property. Take a look at our list below for insight into the often-overlooked aspects of buying a property abroad.
- Land ownership laws vary from country to country, so don’t assume foreign property investment is the same for everyone. The differences are clearly visible when comparing the UK buying guide on GlobalPropertyGuide.com and restrictions on Thai properties by Justlanded.com. Make sure foreign nationals are permitted to own land where you’re looking to avoid disappointment.
- PropertyChecklists.co.uk insists you hire a property lawyer and recommends you see it as part of the purchase costs. You may also want to consider hiring a certified surveyor, according to HomeOwnersAlliance. This is particularly the case if the property is in a tropical climate or an unfamiliar environment.
- It’s wise to do a thorough investigation into any real estate before entering into any negotiations, say JustLanded.com. You can check all records of the title deed on the respective country or state’s land registry website.
- The New Zealand government website indicates that you need a national tax ID to buy, sell and transfer property within the country. This may go for other nations too. Your tax ID in another country is the equivalent to a TFN in Australia, and you can usually obtain one through an application. Check the respective government website for more details.
- Be careful when making a verbal offer – in some countries, it may be legally binding, according to GlobalPropertyGuide.
- Ensure your chosen real estate agent has a license to operate and that it hasn’t expired or been revoked. This precautionary measure is recommended by Zillow’s Foreign Buyer’s Guide. You’ll also want to ask in advance whether they charge a fee to show you around and seek properties on your behalf.
- When paying tax on rental income from another country, you may be able to get tax credits at home for property investments abroad. Australia has Social Security Agreements with 30 different countries that make the process much easier, so it’s best to check whether your destination is on the Department for Human Services list.
- In addition to the laws on foreign land ownership, you’ll want to investigate the types of properties for sale to non-citizens. ManhattanMiami warns that in the USA, for example, it can be difficult for foreigners to buy co-ops, so it’s worth checking sooner rather than later.
- Exchange rates could move against you around your settlement date, forcing you to pay more than you have prepared for. Consider setting up a limit order or forward contract with a trusted foreign exchange specialist.
- Chris Gray is one of our customers who transferred the proceeds of his foreign property investment to Australia. He discovered he could save thousands when compared to his bank, simply by using a leading foreign exchange service with competitive rates. Register online to see our live Market Rates.
At OFX, we have transferred more than AU$84 billion on behalf of 300,000 people worldwide. With our competitive rates, global presence and fee-free* transfers on any amount over AU$10,000, we can help you to find that little bit of heaven you’ve been dreaming of.
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