When a foreigner acquires real estate in a country, he actually becomes an investor. Such investments are beneficial to the state, because the inflow of foreign capital supports the country's economic development. Some states not only welcome, but also encourage investment in real estate. This applies to Malta, Cyprus and other countries of the Southern Mediterranean and the Caribbean, which offer owners simplified immigration conditions. Why are they doing this? On the one hand, these countries experience economic difficulties associated with a lack of production, high unemployment, economic emigration of youth and, in some cases, underdeveloped economy, and therefore they need additional investment. On the other hand, they convert their intangible resources into profit, which real estate buyers from other countries value so much: a warm mild climate, access to the sea and, as a result, the potential for the development of the tourism business.
Where to look for property abroadYou may use some aggregators for search of property abroad. For example, Realting, covering about 30 countries within Europe, CIS, South Asia, Africa, Middle East, Oceania, and the Caribbean, and similar.
Real Estate Agencies
Buying a house by the sea in a warm country, that is the picture almost everyone imagined. Meanwhile, buying real estate abroad can be not just a pleasant fantasy, but a means of achieving specific goals, such as:
|Name||Experto IG||Pafilia||AWAY REALTY||Avangard||ImmoTrading GmbH||DEM GROUP||Bennecke||Premiumazur||Evans||IL Globo|
|Real estate sale||+ +||+||+||+||+||+||+||+||+||+|
|Real estate rent||+ +||+||+||+||+||+||+||+||+||+|
|Registration of a residence permit||+||+||+||+||+||+ +||-||+||+||-|
|Citizenship registration||+ +||+||+||+||+||+||-||+||+||-|
|Real estate appraisal||-||-||+||+||+||+||+||+||+||+ +|
|Registration of a business||-||+||+||+||+||+||-||-||+||-|
- Immigration. You can move permanently or while you work or study. You can also buy real estate for a family, come to a foreign house on vacation or leave it as a "backup plan" for all occasions;
- Obtaining a residence permit/citizenship. Not necessarily for immigration purposes - citizenship of certain countries can give you the right to visa-free access to most countries of the world.
- Getting a passive income. Investing in real estate can bring dividends, because a house or apartment can be rented out. In addition to residential real estate, you can also purchase a commercial property that will generate passive income;
- Profit from the resale. Purchased real estate can be sold for more if it grows in price, or once you renovate it.
- Saving value. In some cases, investing in real estate will help to save money from inflation.
Best countries for buying property
The data is subject to change Real estate in the UAE is popular among investors, as it offers favorable conditions for its acquisition. Thus, the demand for rental of residential real estate is constantly increasing among tourists and local residents, so the owner can rent it out for short or long term. The most expensive tax when buying is the registration fee, which is 4%. Unlike other countries, in the UAE, there is no real estate tax and property income tax.
|Country||ValueUSD per m2||VAT||Transfer fee||Tax per year||Inheritance tax||Taxes, region||Duty|
|Cyprus||1,523 USD||19%||3–8%||0%||0%||-||23,725 USD|
|United Arab Emirates||2,131 USD||5%||4%||-||0%||5-10%||-|
Compare the prices per square meter of real estate in different countries here.
Buying real estate for passive incomeReal estate abroad can be leased for short or long term. Before buying, you need to decide on the target audience, find out the type and amount of demand for rental housing. For example, a house by the sea can be in demand by vacationers in the warm season for both short and long periods. Income from real estate is taxed in the country of purchase - you must consider all possible fees in advance. Of course, a deal with a tenant must be concluded in accordance with the laws of the country. In addition, income from real estate and banking operations abroad may need to be declared at home: for example, it is required from tax residents in Russia. Whether one has to pay income tax not only in the country of purchase, but also at home, depends on the size of the tax abroad and the country itself: for example, to avoid double taxation, some countries have agreements with one another to avoid such issues.
Comparison of countries for a rental property
The data is subject to change
|Country||Income per year||City||Income Tax per 1,186 USD/month||Income tax per 9,490 USD/month|
|Cyprus||4 , 74%||Limassol||0%||35%|
Resale of foreign real estateYou can earn money by reselling your real estate if prices rise. The disadvantage of this type of real estate investment is that the market and the reaction of buyers are not always predictable, as they depend on many conditions. For example, real estate prices may unexpectedly fall, and then the investor will lose part of the invested money, and continued price increases can cause a sharp drop in demand for real estate - there will be nobody to buy it. In this case, the seller of real estate should be prepared to face a number of fees both in the country of sale (tax on the increase in the value of real estate, transfer of ownership, registration and other fees depending on the country) and with taxes at home. In a word - this method of investing does not guarantee income and is associated with many risks. In order not to get into a mess, before buying you need to get acquainted not only with the state and trends of the national real estate market, but also consider possible development scenarios taking into account the maximum number of factors, such as:
- Dynamics of real estate prices;
- Inflation rate;
- Dynamics and volume of demand for real estate;
- Type of demand for housing (housing purchase or rental);
- The pace of development;
- The amount of taxes and fees at home and abroad associated with the resale of real estate;
- Other factors.
Taxes for the sale of real estate in different countries
The data is subject to change
|Malta||8%||Single Tax. In some exceptional cases, the amount may vary from 2 to 10%|
|Spain||19-23%||19% - up to 7,117 USD, 21% - from 7,117 USD to 59,312 USD, 23% - from 59,312 USD|
|Italy||0–43%||0% - real estate that has been owned for more than 5 years or which was the main place of residence of the owner, 23% - up to 17,794 USD, 27% - from 17,795 USD to 33,215 USD, 38% - from 33,216 USD to 65,244 USD, 41% - from 55001 to 88,969 USD|
|Turkey||0–35%||0% - real estate, which was owned for more than 5 years, 15% - up to 2,674 USD, 20% from 2674 to 6,142 USD, and 27% - from 6142 to 14,452 USD, 35% - from 14,452 USD|
|Thailand||0-35%||0% - up to 4,729 USD, 5% - from 4729 to 9,458 USD, 10% - from 9458 to 15,764 USD, 15% - from 15764 to 23,645 USD, 20% - from 23645 to 31,527 USD, 25% - from 31527 to 63,054 USD, 30% - from 63054 to 157,635 USD, 35% - from 157,635 USD|
Buying real estate as a way to protect your moneyReal estate investments do not always generate income, but can be used as a way to store value. Buying a house, for example, can be a more reliable investment than investing in stocks: their value is conditional, and real estate is a real property, the cost and value of which are less susceptible to changes in the economic situation. Investing in real estate will help protect funds from inflation if rising real estate prices outrun inflation in a selected country. Buying real estate abroad is especially good if the storage of funds in your home country is risky or unprofitable due to the unstable or unfavorable financial situation. The disadvantage of this method is that the situation on the market may change, for example, if inflation begins to grow, which will "eat up" part of the invested funds. It is necessary to know the economic situation in the country of purchase, as well as the scenarios of its development, and not to invest all funds in a single object, so as not to jeopardize your entire wealth.
Buying a property to obtain a residence permit/citizenshipStates offer their residence permit or citizenship to those who are willing to invest in local real estate. This type of immigration is often referred to as a "golden visa". Additional requirements for the buyer of real estate may be the absence of a criminal record and the registration of medical insurance. In some cases, the holder of the investment must spend several months per year in the country, not to withdraw investments from the country for several years and have a stable income of a certain size.
Southern European countries are the best option for this type of immigration due to the level of economic development, geographical proximity, the possibility of visa-free travel to many countries, the acquisition of an EU passport, favorable conditions for acquiring residence permits or citizenship, and a warm climate.
The best countries for obtaining a residence permit through real estate
|Country||Type of investment||Investment|
|Greece||Purchase of real estate||296,562 USD|
|Portugal||Investment in the restoration of a real estate that was built more than 30 years ago or which is located in a district that needs reconstruction.||415,187 USD|
|Portugal||Purchase of real estate||593,125 USD|
|Spain||Purchase of real estate||593,125 USD|
|Cyprus||Purchase of real estate||355,875 USD|
|Latvia||Purchase of real estate||296,562 USD|
Best countries for obtaining citizenship through real estate
The data is subject to change
|Country||Type of investment||Investment|
|Malta||Five-year lease agreement for real estate in Malta||94,900 USD|
|Malta||Purchase of real estate||415,187 USD|
|Cyprus||Purchase of real estate||2,550,436 USD|
|Antigua and Barbuda||Purchase of real estate||400,000 USD|
|Saint Kitts and Nevis||Purchase of real estate||200,000 USD|
|Dominica||Purchase of real estate||200,000 USD|
|Turkey||Purchase of real estate||250,000 USD|
|Turkey||Buying Shares at Real Estate Investment Fund||500,000 USD|
The types of taxesThe future owner of foreign real estate should know the types of taxes and fees that he will require to pay in other countries. The taxation scale can be flat - with a fixed tax rate - or progressive when the amount of tax increases along with the size of the taxable amount. The list of fees and taxes is individual for each state. Here is a rough list of them:
- Stamp duty - a "stamp" fee, a fee for carrying out real estate transactions. Present not only with the purchase of real estate, but also with other transfers of property, depending on the legislation of the country. For example, when transferring inheritance. Paid by the seller or buyer.
- Rental income tax. The amount of tax may be the same as income tax. Paid by the lessor.
- Immovable property/real estate transfer fee. The amount of tax may depend on the type of the property and seller. Paid by a buyer or a seller depending on the country. In some countries, it is absent or is a component of VAT, registration fee/state duty and other fees.
- Registration tax - a fee for the registration of real estate transactions. At its core, it may be a tax on the transfer of property or be part of it. Not always present. Paid by the seller or buyer.
- Capital gains tax. It is calculated from the amount of capital gains, but it can be determined differently depending on the country. One example of calculations: when buying a house for 100,000 USD and selling it for 150,000 USD, you will need to pay income tax (difference) of 50,000 USD. The amount of tax may be the same as income tax. Paid by the seller.
- Real estate tax, immovable property tax, cadastral. Tax on the market or cadastral value of real estate, depending on national law. Paid by the owner. The amount can be set locally.
- Net wealth tax. Taxes all property of the taxpayer. Some countries do not have such a tax;
- Municipal/regional tax/local real estate duty are taxes or surtaxes depending on the region, territory, province, etc.;
- Inheritance/gift tax. These can be two different taxes. The value usually depends on the type of relationship between the donor and the recipient. Spouses and direct heirs are sometimes exempted from this tax;
- Value added tax (VAT). It is calculated from the price of the purchased property. In some countries, it is absent for non-residents to facilitate the influx of foreign investors, or does not include transactions with real estate at all.
- Waste collection tax. It depends on the country, region, municipality, etc. The presence of other service taxes depends on the place of residence.
Yes. The owner is required to pay a number of taxes and services, even when he does not live in his house. As a rule, these are:
- Tax calculated from the market or cadastral value of housing. Details need to be specified in the legislation of the country of purchase of housing;
- Payment for maintenance and cleaning of the local area, garbage collection;
- Other taxes and fees depending on the place of residence.
You may notice that the amount of taxes in different countries for residents and non-residents is usually different. In this case, we are talking about the so-called "tax residents". Non-domiciled property owners usually only pay tax on the income they receive in their country of ownership. At the same time, they file tax returns and pay taxes at home in accordance with the laws of their country of citizenship, if required. The owner of real estate becomes a tax resident in the country when he stays in the state for 183 days or more in a calendar year. In most countries, this is the deadline for determining tax residency. The exception is Thailand - the status of a tax resident is received by someone who is present in the country more than 180 days a year.
Basic documents for the purchase of the real estate
- Valid passport;
- Birth certificate;
- Receipts of the payment of necessary fees, duties, taxes related to the real estate transaction;
- Notarized consent of the spouse to purchase real estate, if necessary;
- Corporate approval, if the purchase is made by a legal entity, if necessary;
- Other documents upon request.
The process of buying real estate abroad
- Determine the budget;
- Search for the right specialists: a real estate agent, lawyer, engineer, notary and other specialists who will accompany the transaction;
- Determine the purpose of purchase: for life, investment, etc .;
- Choose the country of purchase: analyze the real estate market, taxes, laws;
- Select a suitable property;
- Inspect the property, including:
- Legal examination;
- Technical inspection;
- Conclude an agreement of intent and reserve an object;
- Pay necessary fees, taxes, prepare tax documents depending on the legislation of the country;
- Draft, discuss and sign a contract on transfer of ownership and the transaction of money;
- Register ownership in the competent authorities;
- Obtain property and life insurance.
An approximate list of additional costs
- Fees, taxes paid when purchasing real estate;
- Payment of services of a realtor, notary, lawyer, engineer and other specialists, if necessary;
- Property insurance;
- Bank transfer fees.