Advantages of owning real estate abroad
6 minutes read
Investing in foreign real estate is a good way to expand your investment opportunities and maintain your financial position. Owning a foreign property allows you to diversify (to prevent financial risks) personal assets and provides a lot of other benefits.
The purchase of real estate abroad gives its owner the opportunity to protect their savings, obtain greater profits and improve their financial strategy. Thanks to this type of investment, it is possible to obtain a residence permit or citizenship in many countries. What other benefits does an investor get?
The purchase of foreign real estate primarily provides the investor with a large profit. However, many developed countries are not able to offer the investor a huge profit. In Australia, for example, an immigrant can get only 2% per annum from renting out their property. At the same time, investments in construction projects in Cambodia allow earning about 7-10% of the property profitability. In this case, the benefit of the increase in property values is 10-15%.
Some real estate markets are well established, while others have gained strength over the past 10-20 years and will continue to develop in the future. These include Georgia and Cambodia. By choosing one of these stock markets, the investor is likely to make a large profit and increase the value of the construction object.
Investing in foreign real estate is an effective method of protecting assets. Such a step protects the investor from possible financial turbulence in the country of citizenship, as well as protects them from unjustified lawsuits. For example, businessmen in the U.S. can at any time become a victim of an unjustified lawsuit. But such claims are unlikely to be satisfied by the court, as the funds of the investor is under the protection of the relevant jurisdictions. In this way the depositor can protect himself from unfavorable circumstances affecting the financial assets and wealth.
In case of political instability or serious economic fluctuations, foreign real estate will serve as a form of state insurance. International property may be a great help for obtaining a second residence abroadhe investor can easily move to another country and request a second passport, if necessary.
Investment in real estate will bring the investor a profit through rents and an increase in the value of housing. In fact, the purchase of foreign property becomes a kind of insurance policy, thanks to which the investor protects personal savings from economic and political instability in the home country.
Many investors from China buy real estate in Vancouver and Silicon Valley to protect themselves from the unfavorable economic prospects of their state. The Western market is stable and more immune to currency devaluation, trade disputes and political instability.
Reducing investment risks
Owning a property abroad simplifies the life of an investor in many aspects. The foreigner has the opportunity to plan their future residence abroad or stay there at a convenient time. Having their own housing, the investor does not have to look for a house to rent when moving to another country for a long period of time.
Many states provide foreign nationals with a residence permit by making an investment in real estate. The residence programs differ, but large investments give applicants the right to request a one year residence permit or citizenship, if the foreigner has lived in the state for a certain period of time.
When buying a property in a country with a different currency, the investor gets the advantage of diversification. This strategy will provide protection against financial crises. Other privileges include living in a foreign country, if the investor spends most of the time there.
Improving tax strategy
An investor, who buys a dwelling abroad, can build a better tax strategy, regardless of their country of citizenship. For example, residents of the United States find it difficult to reduce their tax burden: capital gains are taxable. At the same time, the IRS does not need to notify the two types of foreign assets. These are precious metals, which are kept in private vaults abroad, and foreign real estate.
A foreigner invests in property in another country and expects the value of the property to increase without paying taxes. However, this rule does not apply if the property is rented out. The income of the property owner is subject to taxation.
So, the acquired property becomes a legally secure asset, which is not subject to reporting, but provides additional tax benefits. Ownership abroad provides their owner with additional income and serves as a ground to apply for residence, if a foreigner wants to leave the country of citizenship.
Source: Nomad Capitalist
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