Buying a property abroad
Property abroad: something for me?
After years of hard work, a second property is the ideal dream for many people. Your pension is in sight, you will have more free time and you can finally enjoy your well-deserved rest. Buying a second home would be a perfect way to help you enjoy this period of your life. But what are the options?
The rules in regards to buying a second property have changed in recent times. Therefore, it is a good idea to check the following list:
Investment or vacation home?
The times when you made a nice return on the sale of your (second) home are not as guaranteed as they were before. A second home should now be bought as a place to enjoy the location of your dreams and not in order to make short-term financial gain.
Selling a second home is tricky now because the prices in the housing market have declined greatly. Unfortunately, we are not able to see whether we’ve hit the bottom of this plunge. However, it is a fact that prices are quite favorable now for buying. If you have equity that you do not need in the short term, then a piece of second property is a good investment.
Location, location and location
Just like buying your first property, the location will always remain the most important in order to keep the property value stable. Houses in a town or city often do better and can maintain their value better than when compared to a second home in a suburban or rural area.
Always visit the location of the house you have in mind. Book a holiday in the area and be sure to do it when the weather is not as good; this will give you a complete picture of the region. Talk to the people and locals in the area so that when you walk into the realtor’s office you can tell a nice story to see if they’ll give up any more information.
Second property abroad
Is your dream home found abroad? Do not rely blindly on the real estate agent and be sure to find other advisors as well. Talk to local consultants and get information from the local municipality in regards to future plans for the region.
Look at the housing prices in the area and be sure to ask the land registry to check if there is good property value on the land. It is also good to suppose that you have renovation plans for the future. In this case, it is then important to check to what extent building permits are issued.
Building your Second house yourself
Spain: Let’s say you want to build a house in Spain: Make sure that the builder gives you a completion guarantee from the bank. This guarantee is for your benefit, as the buyer, in case the builder does not fulfill the requirements of his job.
France: In France you already have a completion guarantee. When a home is not completed, then the buyer has two options: 1) he gets his money back or 2) he gets money to finish the project.
Mediterranean: Consider cultural differences among contractors in Mediterranean countries. It can be that they handle contracts and agreements differently than a Dutch person may be used to. For this reason, it might be useful to hire a Dutch supervisor to oversee the project.
Tax and Mortgage aspects
To declare a piece of property as a second home, you must enter it in box 3. Subtracting the mortgage is not possible. However, your mortgage is deductible as a debt from your assets.
Box 3: The assets in box 3 are taxed at 1.2%.
You need to have paid off the mortgage in many countries before you turn 75 or 80 years of age. More about taxes.
Only occasionally leasing?
You may not be able to deduct your mortgage, however you can get compensated for other costs. Costs for the real estate agency, local taxes, and other charges are generally higher abroad than they are in countries as Germany, the Netherlands, England and other northeast European countries. You can discuss this with your real estate agent. More about leasing.
Choose your preferred destination and read more about the countries, like Spain, France, Portugal, Austria, Turkey and Italy.