Buying property abroad
It is said that no two countries in the world have the same legal systems, nor are the systems and policies that rule the acquisition of property the same. Unfortunately, people who are buying property abroad often assume otherwise, making them susceptible of getting into a mad run with the legal intricacies of a foreign property market.
But thanks to the European Union you can now take some comfort in the knowledge that the foreigner buying property abroad are now subjected to the same rules and regulations as the locals or any othe EU citizens for the matter.
But don’t be so relaxed because even though the EU have already systematized the property buying procedures there are still some amendments done locally so this mean no single EU country has the sa,e buying procedures. Individual countries have their own property laws.
One good example of this is Spain, in this country outstanding debts attached to a property becomes the responsibility of the buyer or the new owner. And if you purchase a farmhouse or a villa with agricultural land in Italy, your farming neighbors could have the right of pre-emption. This mean they could buy back the land for less than its usual purchase price.
“This is a complicated area of tax and law” warns international estate agent Knight Frank. So it would be much better to get someone who is really good at these things to be able to make your “buying property aboard” excursion a satisfying one.
Another complication is not only countries but different regions too have their own specific property regulations. For instance, the National Spanish Law on development was revamped and passed by the Valencian Legislature in 1994 which gave local developers in certain specific circumstances the right to demand payments for infrastructure improvements or to obtain repossession orders.
Outside of the EU – from Eastern Europe to Down Under and the United States to South Africa – the legal aspects of buying property are equally variable.
In Croatia for instance, for the time being and pending the anticipated entry into the EU as early as 2006, permission to buy a property must be granted by the Ministry of Foreign Affairs before a purchase contract can be finalized. This can take anywhere from three to 12 months which is a very long time already.
In Turkey, foreigners are not allowed to buy property in villages, rural areas or in the vicinity of military land.
In New Zealand there are limits on where and how much land non-citizens can purchase, while in Australia, outsiders are restricted to buying new-build properties.
The United States presents its own set of purchase proclivities, for instance, although Britons can feely buy a US holiday home, there are restrictions on how long they can remain in the country each year, for example, 90 days unless an application is made for a B2 visa.
And in Florida you will confront restrictions in certain areas that limit the number of days per year that you can rent out your property.
While South Africa does not restrict foreign property ownership, ‘non-residents’ whose nominal place of residence, domicile or registration is outside the common monetary area of South Africa have to declare any money they bring to the country to the South African Reserve Bank.
The exigencies of buying property around the globe are hugely variable. But wherever the location, you should take great care over fundamental legalities – ranging from local taxes, registration fees, and stamp duty to zoning laws, death duties and tax treaties.
Take double taxation treaties. These international agreements limit the tax liability for a citizen of one country who is resident in another – and thus prevents the same income being taxed in two states. Out of more than 1,300 tax treaties worldwide, the UK has the largest network, covering over 100 countries.
Furthermore, do not ignore local property terms. Escrow, ‘tapu’, ‘il rogito’, or settlement may be unfamiliar, but if you are buying property in the US, Turkey, Italy or Australia respectively, these terms are integral to procedure.
And do not assume that a particular housing term in one country will have the same meaning in another ‘Project homes’ in Australia refer to ‘off-the-peg’ architectural designs while in the US a project home refers to government funded, and sometimes called ghetto housing.