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Overseas Property Buying: Financial Pitfalls Expatriates Should Be Aware Of
Starting a new life abroad, while ultimately rewarding, is full of complications – from learning a foreign language to transporting your belongings to a new country.
Often, the key is finding all the services you need to make the transition as smooth and financially painless as possible, and fortunately there are many organizations that can help. Researching your destination thoroughly and taking the advice of experts on board will pay off in the long run.
Part of this process is keeping a sharp eye on the exchange rate of your chosen destination. If you’re moving to the US, for instance, monitoring a dollar exchange currency converter will keep you updated on the daily movements between the sterling and the dollar, helping you to make the best decision about when to make money transfers – a huge consideration if you’re buying a house or car in the local currency.
Using a dedicated currency exchange provider like TorFX is the best way to ensure you don’t miss out on currency fluctuations that work to your advantage. These companies monitor the money markets for you, and offer services that allow you to lock in to a beneficial rate in advance so you can budget more effectively. As they are specialists in their field, these firms also provide much better rates than High Street banks – a saving of up to five per cent on a new property can put much-needed money in your pocket when you are ready to move.
Another financial factor to bear in mind is your pension. Qualifying Recognised Overseas Pension Schemes (QROPS) are often the best solution for keeping hold of your retirement income, as they provide a way to avoid paying (usually higher) UK tax rates on a pension. This said QROPS are not the right choice for everyone: it’s best to talk to a pension specialist to get a full overview of your options when moving abroad.
Local taxes are another way expatriates could potentially lose out, especially if they haven’t researched them ahead of time. Some countries will oblige foreigners to pay extra tax on any property they own, including taking a bigger bite out of rental income, so once again the best solution is to consult a tax expert as part of your overall plan. There may be no way to avoid the taxes, but you can at least build them into your budget rather than arriving to a nasty surprise.
Good luck Penny Hoarders!