Due to hidden costs, property buyers often end up paying more than expected. But how can you avoid such surprises?
By Adam Rahman
When shopping for property in any location, it is common sense to first establish a budget. However, buyers often end up paying more than the original property price. Always be wary of how much these hidden costs will drive up the final amount you will need to fork out.
As a rule of thumb, do not just look at the price quoted without finding out what it covers.
Here are some tips you can follow in order to get a full picture so you can make an informed decision and sort out proper financing arrangements.
Understand the local taxation system
In establishing how much is needed to purchase an overseas property, the first thing you should examine is the amount of tax payable. Local tax and legal implications in buying, owning and selling a property in some countries can be quite complicated, especially in developing countries where terms and conditions may not be clearly defined. It is just as important to know that taxes are subject to change, and investors must be aware of updated taxes and fees by consulting trusted real estate agents.
There are different types of taxes to be paid when buying an overseas property, and they are included in the total purchase price. They are:
– Registration tax
– Stamp duty fee
– Specific business tax
– Income tax
Be clear on legal and agent costs
Experienced legal experts can assist you in navigating the complex framework of overseas real estate. A lawyer from a reputable firm will be responsible for doing the essential paperwork, and informing you about hidden costs before you finalize your overseas property purchase.
Similarly, if you intend to buy property to rent out, make sure you know how much it will cost to have an agent or similar individual manage the day-to-day running of your property, and organize the rental side of things for you. You will need a good agent to make sure your best interests are always protected, especially if you are not planning to remain in the country the where the property is.
Be aware of maintenance fees
Just like any other property, overseas real estate may require you to foot additional monthly or yearly maintenance charges, especially private condominiums. These fees are then used to maintain the building’s cleanliness and appearance, and cover payment for the facility, management company, and the security. Very often, the amount of maintenance fees per property depends on the location where you purchased it, so it is necessary to do some homework in order to avoid being surprised by a large bill.
Calculating the hassle of travel
This may not be classified as a hidden cost tied to property-buying, but it can substantially raise your overall budget if left unchecked. You should factor in regular travel costs needed to visit your overseas property / area of development when you establish your budget. Keep in mind any extra visits you might have to make occasionally to organize and oversee repairs and renovations as well.