Nearly 40% of U.S. millionaires plan to buy homes overseas: report

As per the latest Trend Report by Coldwell Banker Global Luxury, nearly 40% of U.S. millionaires are planning to purchase a home overseas within the next year. Additionally, two-thirds of respondents intend to buy a property abroad within the next five years. The report, based on a survey of 1,053 U.S. consumers aged 18 and above with a household income exceeding $1 million, was conducted from November 27 to December 11, 2023.

Considerations Before Buying Property Abroad

While the idea of owning a property abroad may be appealing to many Americans, there are several crucial factors to consider before making such a decision. According to certified financial planner Jude Boudreaux, partner and senior financial planner at The Planning Center in New Orleans, "Living in a country is not the same as spending a lovely three weeks there." Buyers need to be aware of both similarities and unique challenges in foreign real estate markets.

Financial Challenges and Exchange Rates

Experts caution that financing property purchases abroad often requires cash transactions, with financing options in foreign countries typically offering variable rates or shorter fixed-rate loan terms, unlike the familiar 30-year fixed-rate mortgage common in the U.S. Furthermore, buyers must also consider the impact of exchange rates on currency transactions and the associated costs of converting U.S. dollars. Fluctuations in rates and differences in banks' rates and fees can significantly affect the purchasing power of dollars.

Banking and Tax Implications

U.S. buyers looking to invest in real estate overseas may need to open a bank account in the country of purchase, which can be a complex process due to the requirements of the Bank Secrecy Act. Additionally, buyers must be aware of their tax responsibilities to both the foreign country and the U.S., which can vary based on the intended use of the property.