Things to consider before buying
If you’re thinking buying property in the Caribbean purely
as an investment, doing some financial planning before committing
to a purchase can make all the difference between making a profit
and making a loss. Even if you are just thinking about purchasing
a holiday home in the sun for yourself and your family to use
from time to time, it will be well worth ensuring that you are
fully aware of the tax issues involved in the various methods
of raising the money that you will need.
This can be slightly tricky, as matters such as finances, inheritance
and tax planning are all dependent in some way on the personal
circumstances of yourself and your family, where and how you currently
live, and the rules and regulations of the country that you are
planning to buy property in. The first thing that you need to
be sure of is the reason for your purchase. If the purchase is
merely an investment, then any decisions that you make should
be based upon the facts and figures alone. If you are planning
to use the property yourself, either as a holiday home, or as
a permanent place of abode, then other factors may have to be
taken into consideration. While you will most likely need to seek
some advice from an independent financial advisor as to the specific
ins and outs of your situation, there are some more general issues
surrounding financial planning that anyone who intends to buy
property abroad would do well to make themselves aware of. Here
are some of the questions you should be asking yourself:
• Can you afford to buy outright, or will you have to borrow
money in order to make the purchase?
• If you are taking out a mortgage, should you do so in
the country where you are buying the property, or with a lender
in your own country?
• Do you anticipate earning a rental income on the property?
• Do you intend to achieve residency in the country where
you are buying, and how easy will this be for you?
• If you are retiring abroad, will you be able to access
funds from any existing investments
that you might have, such as a pension fund or an ISA, in the
country where you intend to live?
• Will the property be owned directly by you, or through
a company or pension fund?
• Are you a tax payer in the country where you live at present?
Only if you are clear in your mind about these issues can you
begin to make sound financial plans for buying a property abroad.
The decision of whether to borrow or not may hinge upon your personal
and financial circumstances. However, even if you can afford to
buy outright, it may still be worth your while borrowing, if you
can get a favourable enough rate, so that you can save your cash
for making another investment.
