There are many reasons to buy property abroad. You may have fallen in love with a new city while on vacation or have family you want to be close to. Whatever the reason, buying property doesn’t have a to be just a daydream. Many Americans live and work overseas, and many more are considering retiring abroad. However, there are a few things to consider before you start the process. Give these factors some thought before you make a decision.
Your plans for the property
How you plan to use the property will have a big impact on what you’re shopping for. Do you want a vacation getaway for you and your family? Or do you plan to use it as a vacation rental? Are you seeking an investment property that you’ll sell eventually? Or do you plan to live there once you retire? The answers to these questions will impact your decisions in a big way.
You’ll want to think about how much you’re willing to spend on your property and what financing options are available. How much can you afford on a monthly basis? Will you rent the property out, offsetting your costs somewhat? Securing a mortgage may be more challenging than it is in the U.S., so you may need to speak to a local real estate agent to understand what your options are. It might make sense to reach out to a bank that operates in both the U.S. and the country you’re buying a home in.
Renovations and repairs
Are you looking for something that’s move-in ready or are you looking for a fixer-upper? If you plan to make renovations or need to make some repairs, there are plenty of ways to pay for them. You could decide to dip into your savings or get a personal loan to cover the costs. You might consider other options, such as borrowing against the cash value of a permanent life insurance policy. Universal life insurance and whole life insurance policies accumulate a cash value you can borrow against for any reason, including for home repairs and renovations.
Rules for foreign buyers
Real estate policies and regulations may vary widely from one country to another. It may help to connect with a local real estate agent to understand what is expected of you as a foreign buyer. You may want to prioritize this step. As a foreign buyer, you may need special permits, proof of employment, or letters of intent. It’s much better to get the expert input you need beforehand rather than have your purchase stalled due to incomplete paperwork. Remember that you may need other services, such as those of an attorney and a notary.
If you earn a rental income from foreign property, you may have to pay taxes in the host country. You’ll also report the income to the IRS, but you may get foreign tax credits to offset the taxes paid in the host country. You can consult a tax professional to determine your tax liability and find out if you’re eligible for any tax benefits when buying property abroad.
The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.