5 things to always consider when investing in property abroad

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5 things to always consider when investing in property abroad

Investing in property overseas is a great way to grow the value of your assets both for businesses and individuals. Not only does it put money into a country's economy, but it can also produce a good return for you financially.

Whatever your reason for wanting to invest in property abroad, there are certain things that you should keep in mind.

These are five things to keep in mind no matter the country, the property or the type of purchase you are looking into.

1. Residency & Citizenship Schemes

In certain countries, investing in property may make you eligible to apply for a residency visa or even a citizenship scheme.

For example, some countries offer a "Golden Visa" to investors. Golden Visa is a term given to a residency permit. This is granted by only certain European countries, including Portugal Malta and Cyprus.

It is important to understand the difference between residency & citizenship, and to think about whether you wish to seek either ? and indeed what the requirements would be.

Property Abroad Beachhouse

2. Reputable agents and lawyers

Always find yourself a good lawyer who is independent from the proceedings and therefore has your best interests in mind. Avoid taking on a lawyer recommended by the developer or estate agent who is selling you the property as they can occasionally be acting for both parties.

It is advised to check if they are:

  • Qualified to practise in both the UK and overseas
  • Speak both English and the local language
  • Specialised in property law
  • Experienced in working in your chosen country

You can also find out if they registered on the Law Society. You can also search on the British Embassy website for lawyers who work in your chosen country, and for English speaking translators.

3. Taxes

Taxation is complicated, particularly if you are buying property abroad. Make sure you do your research on what taxes you will be eligible for; (this ultimately depends on the country you are buying property in). When in doubt seek expert advice and make sure you're 100% clear on all the processes involved.

  • Double taxation agreements are available in most European countries (make sure to check they have them in your chosen country). These can help prevent you from being taxed twice in both the UK and your adopted country.
  • Income Tax might have to be paid in your chosen country if you rent your property out while you are away.
  • You will be subject to Capital Gains tax if you decide to sell your property.

Property Abroad Beachhouse

4. Location

When buying property anywhere in the world, one of the key concerns is the location, as this can have significant impact on services you can access. For both business and leisure purposes, it's important that your property is within reasonable distance to train stations, taxis and airports - all the services you're going to need to make your existence more comfortable.

If you are planning on moving your family with you, you'll want to ensure that you have access to a reputable:

  • Hospital
  • GP surgery
  • School
  • Quality retail outlets for food and leisure

Also consider the pros and cons of living in urban or rural areas. Rural regions tend to be quieter and more authentic for culture. However, cities and towns tend to be more diverse, with lots more to do and experience. Urban areas will also have services closer to hand such as electricians and plumbers in case something in the house goes wrong.

Remember that the same applies for investment; the people who buy the properties you are investing in will be considering the same options.

5. Check and make copies of the paperwork

Ensure that you have a written confirmation of any negotiations. For any transactions or payments, try also to ensure you have paper receipts rather than email confirmations.

There's nothing wrong with keeping copies of all your business transactions because if anything goes wrong, you have proof of contacts, and can retrace your steps. Everything from details of the property, to the valuation summary should be filed.

Don't forget the small but crucial aspects of property investment:

  • Does the seller or developer own the title deeds? Can these be transferred to you?
  • Particularly for investment, or property still under development, check the title deeds actually do exist (make a copy of these and, as above, hire a good lawyer to check also)
  • If you are intending for your family to inherit your property, draw up a will

Making physical copies of all your important documents can be very helpful if you are entering a Golden Visa investment programme as the government body overseeing it will likely require evidence of your investment.

Conclusion

From buying a holiday home for personal use, or investing in a new development, transactions over property are always complicated and can take time to effectively take place.

But keep in mind these five important factors; remember to seek expert advice and always make sure you understand all terms and conditions before signing anything.

Written by Alex at Shorex Capital

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