Buying real estate is an exciting and complicated process. When you add the element of buying it in a foreign country, the complications seem to increase exponentially. Traveling distances make it difficult to tour the space and to work closely with inspectors. But, with a good agent and legal team, you can make the process streamlined and safe.
- Hire an experienced team
When you buy real estate overseas, you should have representation locally and in a foreign country. Your local representation should be a local attorney who has experience working with clients who buy real estate abroad. Then, you should hire an international buyer’s agent in the country where you are looking to buy a property. The two should be able to explain the market, the property, and the deal you are getting.
- Understand what you are actually buying
Be sure you know what you are buying, in regards to square footage, property lines, infrastructure, and more. You might be promised that the electrical will be upgraded, but how do you know for sure? Does the square footage calculation include porches, patios, and balconies? Will your property include a yard that belongs to you? And, be sure you understand how long you can own the property, as some properties are returned to the government after a period of time.
- Know who can own property in the country
Some countries have limitations for property ownership. For example, only native Mexicans can buy a coastal property. But in Belize, anyone can buy a property. Be sure that your purchase is legal so you aren’t surprised when the deed is not in your name. Your attorney should be able to help you understand real estate law in a foreign country.
- Know the difference between common law and civil law
Different countries follow different rules of law; some use common law and others use civil law. The laws have some stark differences in the way that property is held. Common law is used in English-speaking countries, while civil law is used elsewhere. In common law situations, you will have a title or strata title depending on if you buy a house or a condo. In civil law, you will horizontal property regimes that protect separate units in one building or buildings on one lot. Your attorney and agent should be able to explain what you will own under the appropriate law in a foreign country.
- Be FATCA compliant
Since you are buying a property in a foreign country, your transaction will need to follow the Foreign Account Tax Compliance Act (FATCA). This act requires that foreign financial institutions and other organizations report the assets that belong to their account holders in the United States. So, if you purchase your property through a bank in the United States, the bank must report the asset, especially if it has a value of over $50,000. Do not confuse this tax act with the Fair and Accurate Credit Transactions Act. If you are out of compliance with the FATCA, you could be penalized between $10,000 and $50,000.