CAN SOUTH AFRICANS BUY PROPERTY IN OTHER COUNTRIES?
Have you ever asked yourself “can I buy property outside of South Africa”? If yes, then you’ve stumbled across the right blog post. There are many reasons why South Africans might seek offshore real estate opportunities. They may want to diversify their investment portfolios or possibly are seeking offshore investments that offer alternative residency (or even citizenship) benefits. Whatever the reason for your asking the question, this blog should hopefully help you find the answers you’re looking for…
Why buy property outside South Africa?
Our country is a beautiful place to live and has so much to offer, so we understand why you might ask this question. Apart from providing a “Plan B” to those who like to keep their options open, there are many other reasons for buying property overseas from South Africa. With global economies being as volatile as they are, it makes sense to diversify your investments to mitigate risk. For example, you could use the property intermittently and generate rental income in a foreign currency when you’re in South Africa. Sometimes career opportunities can also pop up where it becomes feasible to get this kind of offshore exposure in your portfolio and spend some time between countries.
Rules & regulations for offshore property investors
The next question you might ask is whether there are any buying property overseas tax implications? How much tax do you pay on a foreign property? These are great questions! This will usually depend on your destination. For example, in comparison to the United States, where tax is extremely high, an Italian home can often be bought without being subject to many exorbitant taxes. If you are inexperienced with offshore investments, we encourage you to work with a financial advisor who is familiar with them to find the best opportunities.
Also, if it is your primary residence for more than six months each year, you may not owe a property tax on the home you own offshore. However, always get a professional to consult and advise you, they can take care of everything from estate planning to organising financial assistance. And don’t forget, you will also be required to pay capital gains if you have investment income. To avoid double taxation (being taxed in both countries), it is advisable to read through the Double Taxation Agreements section on the SARS website. Also keep in mind that with assets registered in some countries, you may have to pay estate duties, even if you are not a resident.
Top tips for buying property internationally
The first step when considering this kind of investment is spending some time researching the countries in which you’re looking to purchase a property. Find out if they have opportunities available to foreigners. Speak to a real estate advisor with global connections who can fill you in on various environments and stipulations. Some countries will restrict foreign investment into the local housing market, usually owing to a limited supply of homes. Other countries might only allow those who become permanent residents to purchase property in the country.
Portugal, for example, offers permanent residency for those who purchase property, and so does Greece and there are others that do the same. Portugal is with an investment over 500K euros and Greece is over 250K euros,” says Chip Brekken, Director of Global Development for RE/MAX LLC. This trend is popular in other countries like Spain, Cyprus, Malta and Mauritius too, all of which are fast emerging as leading destinations for property investments that deliver returns to South Africans.
For those hoping to immigrate, research the possible sources of employment or income in your desired location. If you’re planning on renting out your property while you’re in South Africa, investigate the tenant base and yield potential, as well as real estate agencies in the country of your choice that can fully manage your real estate in your absence. It is imperative that you have a rental management team that you can rely on. If you’d like to consider alternatives to offshore real estate investment options, definitely look into REITs, Index Funds and even equities.
Next steps for South Africans who want to buy property overseas
Speak to a real estate advisor who has global connections and can put you in touch with somebody who knows more about the local market. “Lean on the advice of agents from a reputable global brand such as RE/MAX and avoid making any long-term investment decisions until you have a more thorough understanding of the local property market. If you plan on immigrating, rent for a few months and explore the surroundings before you decide on where to purchase a permanent home,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
At the end of the day, knowledge is power. Speak to your local RE/MAX real estate office and we’ll ensure you benefit from the full support of our multinational team!