The idea of buying your own office property abroad can be exciting and even hard to resist at times. Depending on your business’ needs and personal preferences, you can find a ton of hotspots abroad with a variety of amazing deals.
Without careful preparation, you’ll be prone to mistakes during the purchase process. As such, you’ll end up getting legal headaches along the way. Therefore, if you plan to invest in a property for your office building, you need to know the right steps in finding an investment property abroad.
Without further due, here are some effective tips to help you:
Make sure you have a solid reason for buying an overseas property
Before anything else, you should make sure you have a solid reason why you want to invest in an office building abroad. After all, this will have a direct influence on your investment plan, starting from your budget to the insurance you have to invest in, as well as using a professional moving company.
If you want to buy an overseas property just for investment purposes, then you have to execute all financial decisions so that they will be in line with your estimated return. On the other hand, if you want to purchase an overseas property to be used as an office building for your company, then you need to focus on the local building codes and other regulations.
Secure your finances
Once you have a clear understanding as to why you want to purchase a property overseas, the next important tip is to secure your finances. This can be a challenging process, especially due to the fact that it will be subject to tons of international laws and is often discussed in local currency terms. Consider consulting with an experienced commercial mortgage broker such as Clopton Capital to help in the process.
At this point, make sure to get an “Agreement in Principle” before you confirm your purchase. Doing so will protect you in the event that you’re not given a loan. Additionally, it will also allow you to reclaim your initial deposit.
Understand the value of the local currency
You also have to understand the value of the local currency where you’re planning to buy your property. If you plan to bring cash from your own country overseas, you might need to acquire a Certificate of Importation. You might even have to open a local bank account.
Through this, you will be able to repay any legal fees and affiliated tax debts on time without any problem. If you want to go through the process of buying a property abroad, following this tip would allow you to go through a smooth and hassle-free transaction.
Consider any financing option available
Most of the time, when you buy a property overseas, you might not be able to secure a local mortgage. However, in the event that you get accepted for a mortgage, you’ll most likely have to pay a higher interest rate and even have to pay a larger deposit.
Due to that, a lot of foreign investors prefer buying properties using cash payments. With this, they will be able to speed up the entire process and even make sure they can get the best deals.
However, if you don’t have cash readily available, you can instead opt for several other financing options. A good example is developer financing, though this is only available in certain countries. Alternatively, you can apply for a self-directed IRA if you plan to use the purchase as either a rental or investment property.
Learn more about the various taxes involved
Needless to say, buying a property – either in your own country or abroad – involves several taxes you should cover. While they might seem daunting, the entire buying process will be a lot easier once you know each of them. That said, here are the most important taxes that might apply to your foreign investment property:
- Property tax – this type of tax is collected by countries from foreign financial assets. That said, you want to check if you’re required to declare your estate as a taxable asset in your country of citizenship as well as property ownership. Countries that have minimal property taxes can be really advantageous for your overseas investment property. To help you with your search, here’s a list of countries that have zero annual property taxes.
- Foreign buyer tax – this is a type of tax that’s imposed upon buyers who plan to pursue foreign property investments. It’s implemented by some countries as a means of earning extra revenue.
- Double taxation treaty – this only applies to certain countries that have the so-called “double tax agreements”. Basically, what these agreements do is prevent you from getting taxed for the same assets in both countries that have the agreement.
- Foreign income tax – as the name implies, this type of tax is imposed on resident foreigners as well as non-resident citizens. Therefore, you want to check your country of residency as well as your country of citizenship for their foreign income tax policies.
- Vacancy tax – likewise known as empty homes tax, this one is intended to increase the number of homes that are available on the market. It specifically taxes homes that aren’t occupied for a certain period of time.
Seek professional help
Lastly, you want to seek the help of a professional. You have to keep in mind that buying a property overseas, whether for commercial or residential purposes, can be complicated and subject to each countries’ rules and regulations. There are lots of countries that allow foreigners to purchase a property, though some of them have several other requirements before you can even start living or working in that country.
Therefore, the best advice is to seek advice from an expert. This way, you’ll be able to understand everything that’s involved in the process of buying overseas property. Ideally, you want to work with a local property attorney to get legal advice before buying a property abroad. Aside from that, you should also get yourself an international real estate agent so you can have an insight into the process of buying properties abroad.
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We hope you found this blog on How to Choose an Investment Property Abroad useful. For more Moving Tips, check out this one blog of Moving Checklist for 2020.
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