What to Know About Buying a Home Abroad

September 12, 2024

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There can be a myriad of reasons why you may want to look abroad to buy property. Perhaps you’re interested in living, working, or retiring somewhere with a lower cost of living.

Maybe you simply fell in love with the locale and want to purchase a vacation home to live out your dream life there. Whatever the case may be, you’re not alone. An estimated 9 million US citizens lived abroad in 2020, according to the US State Department.

If you’re contemplating a move, it’s important to first determine your goal for buying a home, as the purchasing process and implications may vary depending on the purpose of the property.

With your main goal in mind, here are some factors to consider when thinking about taking that leap abroad.

1. Visa and residency requirements

Unless you’re already a citizen or legal resident of the country where you want to buy property, you may want to look into real estate residency programs or digital nomad visas that allow foreigners to purchase property.

A popular route would be to acquire a “Golden Visa” that gives residency to anyone who invests or buys a property, a business, or government bond over a certain value. Many countries have versions of this program with different requirements and limits.

These visas are popular because they typically allow you to become full residents with rights to live, work, study, and receive health care in that country. Be aware of any minimum residency requirements, such as living in the country for a minimum number of days or years to obtain and maintain visa status or rights to hold onto that property.

Also be sure to check with a specialized lawyer and relocation expert on options best suited to your situation and objective.

2. Understand the potential legal and tax implications

Local legal and tax requirements can be complicated, as every country, region, or municipality, has different rules on property ownership.

For local requirements, it’s best to find a local lawyer and tax accountant who can guide you through your obligations and file reports for you.

Also keep in mind that if you plan on renting out the property or expect to sell it after a certain time, you’ll likely need to report your income or profits to the US Internal Revenue Service (IRS), as you may be liable to pay taxes in the US.

Good to know: Opening a foreign bank account with funds transferred to buy the property could trigger additional reporting requirements such as the Report of Foreign Bank and Financial Accounts (FBAR). If you plan on putting the property in a trust or company, it may add another layer of legal and tax complexity.

It is important that before you start your search for homes overseas, you should have a lawyer and tax expert right off the bat who is familiar with handling both US and foreign legal and tax requirements.

3. Organize your finances

Financing your home purchase abroad could be a challenge if you need a loan. For one, most US banks are unlikely to approve a mortgage for a foreign property, and foreign banks may not always offer favorable mortgage terms.

There is also the currency exchange rate to consider: What you owe in a foreign currency may fluctuate relative to the US dollar.

If the loan amount that you need to borrow isn’t very high, you may consider opting for a personal loan from your US bank, or if you already own a home, you may choose to borrow against your home equity. Be warned that each of these options also carries risks like losing your home if you do not make payments on time.

Consider your total relocation costs as well – from moving costs to paying for visas, lawyers, real estate agents, insurance, translators, and more. You would also want to ensure you have enough in your emergency funds to cover any unexpected events.

Think about speaking with a financial advisor or lender who can help you navigate your options, set up a financial plan, and figure out how much house you can afford.

4. Know the local culture and community

Whether your plan is to live abroad all year round or occasionally, you should ask yourself:

Do you like the local culture?
Can you speak the language, or do you prefer an English-speaking community?
Do you feel safe?
Are the health care services sufficient for your needs?

If you need a job, be aware that your experience in the US may not translate directly to the foreign market. You may also encounter certain barriers to finding a job. For instance, you may not have enough language skills or local work experience to qualify.

Checking in with an international headhunter or expatriate group forums may help you get an idea of what it’s like to live and work there.

5. Where do I start my house hunt abroad?

Once you’re set on where you want to buy property, the task of searching for the right home can be exciting and challenging. Not all countries have multiple listing services (MLS) like in the US, and some might not even have real estate agents to represent buyers.

You may want to use a relocation expert to help you find real estate agents or contact the local real estate offices yourself. Working with a local expert or professional could help you better understand how the housing market works. Once you find your dream home, it’s a good idea to have a property lawyer on your side, to ensure everything checks out.

Good to know: You may be able to find American expatriate groups living in the area who could offer recommendations, but always be careful of the advice given and do your own due diligence.

This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this website were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.