Whether you’re thinking of white sandy beaches for family vacations or cabins on a snowy hill, or even a romantic French villa. If you’re reading this owning a home abroad is most likely a dream of yours.
The hallmarks of purchasing a home in a foreign country are: contracts that need to be translated, larger down payments and higher interest rates. Remember, when you’re purchasing a home outside the country you won’t be able to get a US backed mortgage, so if you’ll be needing a mortgage you’ll want to check how you can go about doing this in the country you want to buy in.
You could, however, benefit from the tax write off for a second property as long as it meets the requirements. The IRS will make deductions on on mortgage interest for both the first and second property up to $1 million.
But you’d be at great pains to get the paperwork to be acceptable for the Internal Revenue Service. Especially if it needs to be translated. You’ll also need to convert interest paid on the property as well as closing costs and any additional costs into USD.
Buying Property In Foreign Countries
Some countries have laws that regulate what types of properties and locations can be bought by non-citizens. For example: In Mexico, non-citizens are not allowed to buy beach front properties. In some countries you’ll not be allowed to buy at all and would need to sign a sort of lease agreement for an extended term.
Buying properties in Canada and Mexico is a fairly easy process compared to buying properties in other foreign countries. For countries not close to our border, you should contact an US embassy for real guidance.
Other than that, in most parts of the world purchasing property generally follows the same process as in the US and you’ll need to prove you can afford a mortgage.
Down Payments For International Properties
Interest rates on foreign property can vary throughout the world. So regardless of the value of the American dollar, don’t expect to save a lot on interest rates.
Down payments on property in Canada can be as high as 25% and in Mexico you’ll be required to have a down payment of as much as 60% for a 15 year mortgage. In Canada most transactions are done in English with the exclusion of Quebec. It will be important that you find the right REALTOR® if buying in Canada – click here to find that person today! However, in Mexico transactions must be done in Spanish.
Foreign and Domestic Property Taxes
Buyers interested in buying a home outside the United States to retire to may have to pay both U.S. and foreign residence taxes. Most often the Internal Revenue Service will allow the buyers to deduct any foreign taxes paid from what is owed in the United States.