Buying Real Estate Overseas For Cash Flow (And A Better Life)

19Figure Your Budget, Including the Round-trip Costs of Buying and Selling

When we bought our first property overseas, in Ireland, we were thinking only about the purchase price and the down payment required, given the financing we believed we'd qualify for. That's how we set our budget as we started our search. We didn't speak with a real estate attorney until after we'd begun looking at houses. Fortunately, we had the conversation before we settled on a specific property.

Transaction costs when buying a piece of real estate in the United States are nominal and related mostly to financing. In Chicago, for example, the buyer pays a transfer tax, but, at 0.75%, it's nominal. Lief doesn't remember it and figures it must have been rolled into the rest of the closing costs and buried in the title company disclosure information.

In Ireland, however, as well as in most of the 25 countries where we've bought real estate, the buyer pays a government transfer tax that isn't nominal. When we bought in Ireland, the transfer tax was 9%. That meant that the money we had available for a down payment was less than we had calculated. We had to back out that unexpected 9%.

At the time we resigned ourselves to the transfer tax by reminding ourselves that Ireland doesn't charge property tax. Hold a property for four or five years, and the total cost of your property would be comparable to your total cost in the United States including property tax. Hold longer, and you came out ahead.

Transfer ...