What American Expats Need to Know About Buying Real Estate Abroad

by  Susan B. Barnes | May 21, 2024

At the end of a lovely day in Bergen, Norway, one of the ports we called upon during a Holland America Line cruise, my husband casually said to me, “I wonder what it’s like to live here.” In the blink of an eye, I had the real estate app on my smartphone open and was scrolling through homes and condos for sale, dreaming of living the expat life. 

Millions of people have made that dream a reality. According to the U.S. State Department, an estimated 9 million U.S. citizens live overseas. Once they’ve made the decision to move, and to where, one of the next considerations is housing. Like here in the U.S., living spaces can range from apartments and condos to single-family homes and cottages.

But what does it take to buy into foreign real estate? We checked in with the experts to find out.

The first thing we learned is that before diving in, find out whether or not you can actually buy real estate in the country in which you’re hoping to live. According to LendingTree, some countries restrict who can own property, pointing out that Spain’s 17 regions each have their own government and regulations, while those hoping to buy in Austria will need to be pre-approved, and in Mexico, foreigners cannot buy real estate in certain restricted zones.

“When considering an out-of-country property purchase, learn the local regulations around real estate ownership for foreigners before considering any purchase, and strongly consider renting first to get the lay of the land,” advises Doug Perry, strategic financing advisor at Real Estate Bees. “Remember, one of the rules of buying properly outside of the U.S. — it is always easier to buy a property than sell it. 

“Take your time and rent first to make sure you like it before you buy,” he adds.

Once you’re confident you can buy real estate in the country of your dreams, it’s time to take a look at money. Before you begin down the road of financing, HSBC suggests accounting for additional costs you may incur when buying, like insurance and tax implications. As far as taxes, it’s not only the foreign country’s property tax structure to consider, but U.S. tax implications as well. According to Investopedia, in general, you can deduct mortgage interest and points up to $750,000 from your tax return, but foreign real estate property taxes are no longer deductible; that benefit was eliminated in 2017. 

Jacob Wackerhausen/iStock

In the U.S., there are various options when it comes to financing a real estate purchase, but that’s not always the case when looking internationally. LendingTree says that while most U.S. banks are not keen on handing out mortgages to buy foreign properties, there are lenders who work internationally and are open to mortgaging overseas properties. 

Another option is to work with a bank within the country you’re looking to buy, with one caveat to consider: If the exchange rate changes between the local currency and U.S. dollar over the course of your mortgage, you may end up paying more than you had initially budgeted.

“Real estate transactions overseas are done very differently than here in the United States,” says Samira Easton, broker associate, REALTOR® and global real estate advisor with Premier Sotheby’s International Realty. She adds that notaries and attorneys in Europe and in some Central American, Latin American, and South American countries handle the entire transaction — no title companies are involved. To that end, HSBC adds that outright ownership may not be clear in foreign countries, so you may want to dig in a little deeper there, too.

Additionally, the National Association of REALTORS suggests would-be foreign property investors consider continuing expenses that may pop up in addition to a mortgage, including utilities, homeowners’ associations fees, maintenance, and, of course, traveling back and forth to your new home away from home.

Learning the ins and outs of buying foreign property can be complicated, so Easton suggests leaning on the pros for guidance.

“Anyone contemplating a real estate purchase overseas should consult with a CPA or tax professional before doing so,” she advises.

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