Investing Abroad In Property

Irrespective of the numerous investment options all over the world, investment in property remains top of the list for most investors. This is mainly due to the high returns and the lower risks associated with properties in many areas. However, most of these investors end up investing in property in their country of origin or residence despite the opportunities available in other areas. This article explores the potential benefits of owning overseas property.

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Risk Management

If you are like most investors, you would not want to put all your eggs in one basket. Why? Because, the risk of losing everything, should something go wrong is very high. The same is applicable with respect to investment in property. The prevailing market conditions and the political environment in a country have a great effect on property appreciation and prices at any given time. However, when one country is facing recession and depreciation, there are others experiencing high returns and appreciation. Therefore, investing in different countries spreads your risks which ensures that your property portfolio continues to appreciate irrespective of the prevailing conditions in one area.

Market differences

With respect to property markets, some countries are considered mature while others are still developing. In the developed nations, a single investment can be quite capital intensive. On the other hand, in developing markets, there are opportunities that may require less capital and have the potential to earn higher returns. If you are resource strained, then looking beyond your country may surprise you. Besides this, some developed markets may have other barriers to entry that developing markets may not have.

Tax benefits

When a property is purchased using a mortgage, the interest charged on the mortgage is a tax-deductible expense. The same is true for mortgage insurance products and other property related purchases. This means that these can be utilised to reduce the amount of tax payable each year. Overseas property may also attract different tax rates depending on the tax laws of the country. In some cases, taxes paid in a different country can be used to reduce the amount of taxes you pay in your country of residence. It is therefore good to explore these with the assistance of an international tax expert in order to determine the extent of benefits.

There other benefits of owning property abroad are as follows. You have the freedom to utilise the property as your vacation home when it is not leased out, your chances of gaining residency also improve when you own assets in a country, the property and its returns can serve as a financial reserve to be utilised in future in case things go wary in your country and there may be foreign exchange gains when the currencies used are different.