Every year, thousands of Australians set sail for different lands in search of new adventures.
According to the Department of Immigration and Citizenship, 86,277 people left the country permanently in 2009-10.
A clear majority (46.3%) emigrated to the UK, the US and New Zealand, while the next most popular destinations were Singapore (9.1%), the United Arab Emirates (6.3%) and Hong Kong (5.2%).
But whether you’re looking to permanently escape Australia, or just looking for a holiday home overseas there are a few tips and tricks to buying property abroad.
1. Do your homework
There is a lot of information on the Internet and sites such as realestate.com.au list thousands of properties in countries around the world, but there is no substitute for doing your research on the ground. This is a given if you’re planning on moving abroad, but if you’re just looking for an overseas investment property then you’re going to have to factor in the cost of airfare to and from the country you intend to purchase property in.
Of course the same things that you would look for in a property in Australia will also apply overseas. Is there transport? What amenities are close by? How far is the beach?
But you also need to think about how different seasons will affect the property. Do shops close in the off-season? Is the area prone to floods during the rainy season? Will the bugs drive you crazy in spring? To really get a sense of the area talk to the locals and other expats.
If you’re investing, then determining where to buy will also be influenced by the rental market. Finding someone with local knowledge that you can trust is invaluable.
2. Get an expert
Finding a buyer’s agent with first-hand knowledge of the local property market, connections and established relationships will really help you when it comes to making an informed purchase. Vet the people you will be dealing with in person. If they can see you’re a real person, they’ll be more inclined to treat you fairly. The same can be said for property managers.
When employing a legal expert, try to find a local and international, English-speaking law firm. If you plan on renting a property overseas, you will need to understand your obligations as a landlord.
3. Get tax facts
If you’re moving abroad, get the facts on inheritance and capital gains tax laws. For example, in France, the inheritance laws dictate that your property will automatically be inherited by your children, not your spouse.
As for property investments, any rental income received from a foreign property investment is considered by the ATO as taxable income. It’s important to note that you can also claim deductions for property-related expenses such as mortgage interest and property management fees. If you sell, capital gains tax will apply on any profits.
4. Figuring out the finance
The process of financing an overseas property can be quite difficult depending on the country.
You basically have two choices: organise finance with an Australian lender or arrange finance with a bank in the country you’re looking to purchase property in.
Many of the larger Australian banks have partners and branches overseas, which can be helpful in completing property transactions and arranging paperwork. It’s important to note though that if you’re arranging a loan with an Australian lender, some will require you to already own property in Australia.
It may actually be easier to deal with a bank in the country you intend to purchase property in.
When arranging finance you have to take into account the exchange rate on currency transfers. Exchange rate fluctuations may result in gains and losses of around 10%. One way to get around this is to deal with a foreign exchange company which can lock in an exchange rate for a small fee.
5. Buying costs
Legal fees, valuation fees, taxes and insurance vary from country to country, so it’s important to budget accordingly. In Vanuatu for instance, these costs amount to about 10% of the purchase price.
6. Back-up plan
Even if you’re planning to move permanently, it doesn’t hurt to keep one foot in the door in Australia – just in case the call of Tim Tams, Two-up and Toohey’s New becomes all too much.