Have you just been abroad and found the home of your dreams? If so, don't run too fast or rush into a purchase. After all, investing in a second home requires rational consideration.
Every day some 25 Belgians buy a second residence abroad. This was communicated by the newspaper De Tijd just last week. That brings the total number of Belgian taxpayers with properties outside our own country to 200,546. Still, a foreign adventure does not seem to be for everyone, as more and more people are being scammed into buying a foreign cottage. For this reason, it is particularly important to weigh each option carefully and not rush headlong into anything.
It is best to ask yourself the following questions:
Are you choosing new construction or an existing building?
If you opt for new construction, it is best to check the background of the builder or developer. Better yet, it is best to ask for a personal introduction to get all the necessary information. Ask about projects already completed, references, and the original founders of the company. You can also research the published financial statements and whether they are solid.
In case the house or project has yet to be built, it is best not to accept the request for a large down payment. In this case, payment in installments per finished section is a lot more interesting and safer.
Prevent your foreign house hunt from becoming a nightmare
Will you find that dream house or apartment abroad during the summer? In the intoxication of the vacation spirit, you also need to make rational considerations, although that may be over a good glass of wine.
Every day, 25 Belgians buy a second residence or home abroad, it was revealed this week. In the meantime, 200,546 Belgian taxpayers have a cottage outside the country's borders. But this is not always a dream come true. In recent months, stories have surfaced of Belgians who have been swindled. To avoid financial hangovers, you should make some considerations at the beginning of your house hunt.
Be vigilant when signing the compromise or deed
As with any real estate purchase, when drawing up the compromise or purchase promise, it is best to provide some clauses that secure you or allow you to involve others at a later stage. Especially the latter is interesting, since that way you avoid paying transfer tax for a second time.
Own use or for rental?
Whether you will occupy the property yourself or choose to rent it out makes a big difference. Renting out a property is subject to rules and laws that must be strictly complied with. Moreover, the purpose also determines the tax regime, because whoever rents, will undoubtedly owe income tax regardless of the country. You can read here how Belgium handles this extra income or stay and how our country includes it in our tax return.
How much does a second stay cost you?
The biggest expense when buying a second residence, is the purchase. But what you should always keep in mind is the annual costs you will face. Maintenance, insurance, utilities... In addition, in most countries you also have to pay an annual property tax AND there is also the income tax based on usage.
Do you want to reduce your estate taxes? Then borrowing from the bank may be a good idea. After all, a loan can reduce or even avoid taxes! Be sure to check first which loan is most appropriate. Read more about financing options here.
Next generation
What is all too often forgotten is succession planning. After all, if you die, in most cases your (foreign) estate will be passed on to your children. However, they must pay a hefty sum in inheritance tax on every home or property. For this reason, split purchase is often done in Belgium.
Are you looking for a second stay abroad? Get inspiration at ImmoWatchers.be
