Acquisition of real estate abroad is increasingly in demand among Ukrainians. Those who have significant savings left are trying to invest them in housing abroad in the hope of making a profit. Co-founder of Ukraine's first fintech ecosystem Concord Fintech Solutions Olena Sosiedka in an exclusive interview UNN told what to pay attention to when making such a purchase, which countries are better suited for investment and what risks such an investment carries.
Details
"Buying real estate abroad has really become popular among people with significant savings, especially in the context of an unstable political and economic situation," Sosiedka said.
According to her, there are several aspects that should be taken into account when deciding to invest in foreign real estate. In particular, among the advantages of such an investment of savings is the diversification of assets.
"Investing in real estate overseas can help diversify your assets, reducing the risks associated with economic instability in your home country," Sosiedka noted.
Many countries offer more stable economic and political conditions, which can provide greater investment protection, she said.
Another bonus of buying real estate abroad can be the possibility of obtaining a residence permit or citizenship. After all, some countries offer programs of investment citizenship or residence permit in exchange for the purchase of real estate.
"Some overseas real estate markets have seen steady price increases, which can be profitable in the long term," Sosiedka added.
Which countries are more suitable for real estate investment
Among the countries suitable for real estate investment, for example, Spain and Portugal. "These countries are popular due to their favorable climate, high quality of life and stable real estate market. Portugal also has a "golden visa" program, which allows you to get a residence permit for investing in real estate," said Sosiedka.
Greece is another country with attractive conditions for investors. The "golden visa" program is also available here.
It is also common to invest in German real estate, as it is, according to Sosiedka, a country with a stable economy and a stable real estate market, especially in major cities such as Berlin and Munich.
Canada, for example, offers a stable real estate market and a high quality of life, especially in cities like Toronto and Vancouver.
The UAE, particularly Dubai and Abu Dhabi, offers a fast-growing real estate market as well as residency opportunities, according to Sosiedka.
Risks of investing in housing abroad
The expert noted that there are also a number of risks associated with investing in foreign real estate. In particular, legal difficulties may arise.
"Real estate and tax laws can vary significantly from state to state. It is important to understand and comply with local laws," Sosiedka noted.
She noted that changes in exchange rates can affect the value of your investment.
In addition, it should be remembered that selling real estate in another country may take longer and be more complicated than in Ukraine.
Also, according to Sosiedka, there may be additional costs. These may include taxes, insurance, property maintenance, and management costs if you are not a permanent resident.
The expert added that even in seemingly stable countries there may be political or economic problems that will affect the real estate market.
Foreign Real Estate Taxes
According to Sosiedka, in many countries there is a tax on the purchase of real estate, which can vary depending on the value of the object and the region. For example, in Spain it is about 10%, and in Portugal it is 6-8%.
In addition, there are annual property taxes abroad, so the property owner is obliged to pay annual property taxes. Their amount depends on the valuation of the property and the rates set by the local authorities.
Some countries also have a capital gains tax. That is, the sale of real estate may be subject to this tax, and its rate and terms may vary significantly from country to country.
If you rent out your property, the rental income will be taxed, Sosiedka reminded. Some countries also impose a value added tax (VAT) on commercial real estate rentals.
Renting out real estate
Renting out a property can be a source of additional income that can cover some of the property's maintenance costs and taxes.
"If you don't live in the country permanently, you can use management companies that will take care of finding tenants, collecting rent, and maintaining the property," Sosiedka advised.
In tourist-attractive areas, Sosiedka said, it is possible to rent out properties on a daily or short-term basis, which can be more lucrative than long-term rentals.
The expert emphasized that it is important to know and comply with local laws and regulations regarding rental properties. This includes registration of the rental agreement, tax obligations and respecting tenants' rights.
"Investing in foreign real estate can be a justified step for those looking for safe and stable investment options, especially in the unstable situation in Ukraine. However, it is important to research the market thoroughly, understand the legal and financial aspects, and be prepared for possible risks. Consultation with international real estate experts and financial advisors can help you make a more informed decision," summarized Sosiedka.