- Reason 1: An opportunity to increase your wealth
- Reason 2: Asset protection
- Reason 3: Build a ‘safety net’ to protect yourself from a political catastrophe in your home country
- Reason 4: An opportunity to purchase property that does not have to be listed in the tax return
- Reason 5: An opportunity to renounce your present citizenship for tax planning purposes
- Reason 6: A step towards becoming an international businessperson
- Where can you invest?
Owning a piece of real estate abroad can bring a number of precious benefits. First of all, some countries offer legal residence or even full citizenship to foreign investors buying real estate there. Second, an investment in foreign property may help you acquire a higher return as real estate prices grow faster in some countries than in other ones. Third, investing abroad is an opportunity to protect your capital from possible cataclysms (natural or political) in your home country. There are many other important reasons why you should consider purchasing real estate abroad and we discuss them below.
Reason 1: An opportunity to increase your wealth
Putting idle money in a piece of real estate with the intention to let it on a lease is a simple way to protect your capital from inflation. However, the income that you can get is as small as the bank interest if your real property is located in a country with a stagnating real estate market.
There are places on the planet, however, where real estate grows in value at a high speed. If you invest in real property in Cambodia, for instance, you can count on earning from 7% to 10% of the property cost a year if you rent it out. If you purchase an apartment, for example, in a large city in Cambodia that is located near some important infrastructural objects, you can earn up to 15% a year from rent. We must note that there are restrictions in the country that apply to foreigners buying real property there. At the same time, you can qualify for citizenship of Cambodia by investment and then no restrictions will apply to you.
When you own real estate in a well-developed country such as Australia, for example, your rental earnings will be only one or two percent a year. Yes, your income is going to be stable, as real estate prices have been steadily growing in Australia over the last ten to fifteen years but it is going to be small.
After the crisis of 2007-2008, when the real estate prices dropped in most well developed countries, they have been slowly growing again. But only slowly. Purchasing real property in Sidney, New York or London would make little economic sense right now. However, if you buy a house or an apartment in Cambodia or in Georgia (a former Soviet republic in the Caucuses, not an American state), you can have a hefty return on your investment.
You can also invest in a less exotic country such as Spain, for example. Real estate prices dropped tremendously there when the coronavirus pandemic hit the country. They are picking up now but the peak has not been reached yet. So there are countries in the world that look rather attractive to a foreign investor wishing to buy some real estate there and earn a profit.
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Reason 2: Asset protection
Your foreign property will be unreachable for corrupt government officials in your home country, dishonest competitors, or angry ex-spouses. When you have a house or an apartment in a foreign country, you will know that it cannot be expropriated if, for example, a case is framed against you and you lose your property at home.
Reason 3: Build a ‘safety net’ to protect yourself from a political catastrophe in your home country
Political tensions may at times lead to military conflicts between countries or within one country. There is a civil war going on in Ukraine at the moment, for example. A riot has been recently suppressed in neighboring Belarus. The Australian authorities are taking draconian measures in an attempt to combat the coronavirus pandemic and people are trying to revolt against them. Mass protests against the lockdown and mandatory vaccination took place in France some time ago. The world is not a safe place to live.
At the same time, there are quieter countries on the planet where you can buy real estate and thus qualify for legal residence or full citizenship. Grenada in the Caribbean can serve as an example. The country does not even have any military forces! You can live in peace in Grenada if you invest from US$ 300,000 in Government-approved resort property in the country. You are also free to let your Grenadian property on a lease to tourists, as Grenada is a popular tourist destination. After four years of ownership, you can resell your property in the country if you wish while keeping your Grenadian passport.
Historians note that there is always a war going on somewhere, a financial crisis in one or several countries, hyperinflation in a national state, a civil war or a revolution. And this is true for at least the last hundred years if not the whole history of humanity. The world is a troubled place and this fact stimulates the popularity of citizenship-by-investment programs that some national states administer.
Think of such countries as India, Iran, or Brazil, for example. They seem to be ripe with military conflicts and economic problems. Those Brazilians who can afford it often seek legal residence in Portugal. You know that Brazil used to be a Portuguese colony and the authorities in Portugal are very welcoming to Brazilians. The latter feel safer when holding a European residence card because they know that the Old World’s economy is more stable than the economy of their home country.
A medical insurance policy will help cover your medical bills in case you develop a health problem. Foreign citizenship can serve as an insurance policy against a political or economic disaster that might hit your home country.
Reason 4: An opportunity to purchase property that does not have to be listed in the tax return
When you purchase real estate in a foreign country in order to qualify for legal residence there or citizenship, you can gain one more advantage. This opportunity is especially relevant to you if you are a citizen of the United States.
You do not have to inform Uncle Sam that you have foreign property when filing your tax return. The IRS does not have a form that you have to fill out if you own foreign property. It is true that there is the Report of Foreign Bank and Financial Accounts (FBAR) that you have to submit and there is the Foreign Account Tax Compliance Act (FATCA) that you have to comply with. But you do not have to report to the IRS owning real estate abroad. You also do not have to report owning gold and other precious metals that are kept in the form of bullions in private vaults.
Many people from the USA as well as other countries buy foreign property to keep their home country’s fiscal authorities uninformed about their possessions. Yes, you will still have to pay capital gains tax to the US budget (if you are a citizen of the country) when you resell your foreign real estate at a profit. Such is the fiscal system in the United States but even this unpleasant requirement can be avoided.
Reason 5: An opportunity to renounce your present citizenship for tax planning purposes
Uncle Sam taxes his citizens wherever they make an income – at home or abroad. Western European countries do not do that but taxes there are higher than in the US. At the same time, there are jurisdictions where taxes are more bearable.
Americans in particular are not happy with the fiscal policies of the current administration and the number of US citizens renouncing their citizenship for tax considerations has been growing recently. However, you do not want to become a stateless person because this status will have some very unpleasant consequences. The way out would be to purchase real estate in a foreign country that issues passports to foreign investors.
It is virtually impossible nowadays to pay zero percent in taxes whatever country you live in. At the same time, your tax burden can be reduced if you buy real estate in a low-tax jurisdiction and become a tax resident there.
Reason 6: A step towards becoming an international businessperson
When you own real estate in a foreign country, it can make you qualified for legal residence or citizenship there. If your extended presence in the country is legalized, this means that you have access to all the social infrastructure as well as business opportunities available to native-born people.
If you purchase a piece of real estate in Portugal, for example, you can qualify for a ‘golden visa’ that is a legal residence permit. The permit will give you easy access to the Portuguese banks, among other things. If you come from a lesser-developed country, you will find that the interest rates on loans are much lower in Portugal than those in your home country. Besides, you can use the country as the platform to conquer the European markets if you are engaged in some business activities. Registering a company in the country of legal residence is easier than registering a foreign company.
Where can you invest?
If you would like to purchase some real estate abroad to qualify for a legal residence permit or a second passport, you have quite a large number of options to consider. Countries in all parts of the world administer residence- or citizenship-by-investment programs. We have to note, however, that in all cases you will have to bring a police clearance in addition to the investment in order to qualify for foreign residence/ citizenship.
Below please find an incomplete list of countries that grant residence permits or passports to foreign nationals buying real estate there. We bring the most interesting options to your consideration but we will be happy to discuss the opportunity to buy real estate in any other country with you.
This European country has a citizenship-by-investment program but it is going to be available only until the end of 2021. Only non-EU citizens can qualify for citizenship of Montenegro by investment.
The minimum required investment amount is 350,000 euros. One hundred thousand has to go to the state fund as a donation and the rest of the sum can be invested in Government-approved real estate.
Bulgaria is one more country in Europe whose citizenship can be ‘purchased’. You would have to make a larger investment though in comparison to Montenegro. You have to bring a million euros to the Bulgarian economy investing at least 300,000 in real estate in the country. The rest of the sum has to be invested in securities.
The Spanish ‘golden visa’ program was launched in 2013 and it has generated quite a lot of income to the national budget since that time. You can acquire legal residence in Spain by investing at least 500,000 euros in real estate in the country, a business venture, or some other assets. The Spanish residence-by-investment program is popular with wealthy foreigners.
We must admit that it is going to take you a lot of time (ten years to be exact) to turn your Spanish residence card into a Spanish passport. However, it is anyway possible to become a citizen of Spain even though it cannot be done in an instant.
Similar to Spain, Greece runs a residence-by-investment program and again, you would not be able to acquire Greek citizenship fast. At the same time, the required investment amount is much lower in Greece: you can by real estate that is worth at least 250,000 euros and this will be enough to make you eligible for a residence permit in the country.
You will qualify for a legal residence permit in Latvia (but not for a Latvian passport) if you invest 250,000 euros in real estate in the country. Latvia may not be as prosperous as Western European countries but it is an EU member state anyway and a Latvian residence card will let you travel across Europe freely.
The Maltese authorities administer a citizenship-by-investment program even though new applications for citizenship of the country are not accepted at the moment. The government officials are redesigning the program to conform to the EU authorities requirements. For this reason, the local citizenship-by-investment program has been put on hold de facto even though no official announcement about it has been made. When the program was in operation, it cost close to one million euros to obtain Maltese citizenship. The foreign applicant has to make a combined investment putting at least 350,000 euros in real estate in the country.
Portugal offers some of the most attractive residence-by-investment opportunities that you can find. The country is one of the EU founding members, its economy is stable, and the required investment amount starts at 280,000 euros (if you buy property in need of repairs and located in a rural area). What makes the local residence-by-investment program even more attractive is a comparatively short waiting period. You can apply for full citizenship or a reputable European country after holding the ‘golden visa’ for five years only. What is more, you do not have to live in Portugal to keep the residence permit. Stay in the country for two weeks every two years and you will meet the personal presence requirement.
You can invest US$ 250,000 (in Turkish liras) in real estate in Turkey and this will make you qualified for a second passport. We would like to stress that by investing twice as little as would have to invest in Spain, you can acquire full citizenship of a foreign country instead of a residence permit. Turkey allows dual citizenship.
A foreign investor can acquire legal residence in Jordan by investing at least US$ 282,000 (the equivalent in the local currency) in real estate in the country. The property shall remain in the investor’s possession for ten years. After that, he or she can sell it back while retaining the residence card. The Jordanian residence-by-investment program is rather popular with citizens of the Middle East countries.
You can invest from US$ 300,000 in real estate in Saint Lucia to become eligible for citizenship of the country. The important condition is that the property has to be approved by the local Government for participation in the citizenship-by-investment program. Currently, only two development projects are approved: Saint Lucia Canelles Resort and Fairmont Saint Lucia resort complexes.
Antigua and Barbuda
This Caribbean state is making an attractive limited-time offer: you can invest only US$ 200,000 in real estate in the country to qualify for its citizenship. Before the coronavirus pandemic, the required investment amount was twice as high and it is reasonable to expect that the price will increase again after the pandemic is over. This means that the right time to invest in real estate in Antigua and acquire a second passport is now. You will be able to sell your property back after five years while keeping the passport.
There are other interesting offers in the investment immigration market too and making the best choice can be challenging. International Wealth experts will be pleased to discuss the available options with you and help you select the most attractive one, from your own perspective. We do not charge anything for our consultations on acquiring legal residence abroad or citizenship of a foreign country.
Please request a personal consultation on residence-/ citizenship-by-investment opportunities by writing to firstname.lastname@example.org. It will be our pleasure to assist you in the endeavor.