I am getting out of the frosty north for a week’s vacation and amconsidering the possibility of maybe looking for a vacation/retirementhome or condo in the south. What should I be aware of legally?
Q: I am getting out of the frosty north for a week’s vacation and am considering the possibility of maybe looking for a vacation/retirement home or condo in the south. What should I be aware of legally?
A: First of all, congratulations on your success and the envy of me and my readers; leaving us all here in the cold while you travel south.
There are a host of items you have to consider when purchasing a vacation home in another country. The first and foremost is that each country has different laws with respect to real estate purchases so it is imperative you get good advice with respect to the legalities of process. For example, up until a number of years ago, a foreigner wasn’t able to purchase property in Mexico without setting up a trust agreement (I believe this has now changed).
In other countries, the beaches are considered public property so even though you may be promised a beautiful beach with your vacation home, it may be that all of the tourists and locals will tromp through your front yard on a daily basis.
Beware of bargains and particularly of time-share options. Usually, if a deal sounds too good to be true, it is. My understanding of time-shares is that they turn out to be generally no where near as attractive as the initial marketing pitch.
You should also be aware that financing your purchase may be an entirely different proposition in a foreign country. I have heard of strange financing ratio’s that foreign banks use to determine whether you are eligible for a mortgage. Make sure if you don’t have all the money to spend on your dream vacation home, that you make the offer conditional on financing.
The U.S. market, especially south Florida, is still attractive but you have to be aware that they have a different tax scheme (as do most southern countries) and you need to be aware that if you plan on renting your southern home either on a part-time basis or full-time, you may be subject to local income tax. This might not be in your plans but you should educate yourself about this even for that “what if scenario.”
The final piece of advice is that your decision should be very reasoned and well planned. Don’t walk into a place, fall in love and sign on the dotted line. Make sure you have done your homework on the place and that you have good advice with respect to the transaction: legal, tax and real estate. Good luck!