Global Property Investment

April 2, 2010
Panama City, Panama

PLUS:

• Holiday Season Ends In Panama (At Last!)...
• Top Retirement Options In The South Of France...

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Dear Live and Invest Overseas Reader,

One key to making money investing in real estate around the world is remembering all associated costs of any transaction, both coming and going, in your initial figuring. Forget to factor in capital gains tax, for example, in a jurisdiction where you're liable to pay it at a rate of 25% (as you can be in Mexico), and your overall rate of return certainly will suffer.

Here's what you need to know.

Depending on the country, you'll have a transfer tax (called "stamp duty" some places), which is sometimes paid by the seller and sometimes by the buyer; real estate agent fees (again, in some countries paid partially by the buyer); attorney/notaire fees; registration fees (to record the title); property taxes; income taxes on any rental income; and capital gains taxes when you sell.

If you set up a company to hold the property, you'll have incorporation fees and annual fees associated with maintaining that corporation.

Figuring out all of these costs can be daunting. There's no single source available that provides complete, current, and reliable data. This is why I'm putting together a report for my Marketwatch members outlining all associated fees of investing in the countries on my radar right now.

Some highlights...

You'll pay no capital gains taxes on real estate profits in New Zealand, the U.K. (if you're a non-resident), or Croatia (if you hold the property in your own name for at least three years). You'll pay no capital gains taxes in Argentina if you hold the property in your own name, period.

France is one of the most burdensome tax jurisdictions in the world. Yet, if you hold a piece of property in this country for 15 years, you owe no tax on any gains you realize when you eventually sell it. From years 6 to 15, the capital gains tax in France is reduced by 10% per year.

If you don't like to pay property taxes, look at Croatia. Ireland also imposes no property taxes on residential property. You'll pay no tax on property held in Buenos Aires, though you will on real estate you own outside the Argentine capital. Note that you are liable for a wealth tax on the value of your property in B.A.

Panama offers a property tax exemption for up to 20 years on new construction (for the building only, not the land). Uruguay imposes a property tax, but the rate is extremely low, as is property tax in France.
This is not to say that I advise investing in property in New Zealand because you'd pay no capital gains taxes...or in Ireland because they don't have property taxes. You have to analyze the investment market and any particular opportunity first. Then take into account all associated costs and taxes.

You just want to make sure you know what all those costs and taxes will be up front, while you still have time to adjust your strategy to accommodate them.

Lief Simon

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---------- "It's remarkable, really, that anything ever gets done in this country at all," Lief commented this morning as we stood on our balcony looking out at the quiet and empty streets all around.

We are (finally) at the end of Panama's protracted holiday season, which begins Nov. 3, when Panamanians celebrate Independence Day (for the first time...this one commemorating their independence from Colombia).

Nov. 4 is Flag Day, followed by Colon Day on Nov. 5. Government offices and banks open again on the 6th, only to shut their doors on Nov. 10 to celebrate Independence Day (again...this one remembering the first call for independence from Spain).

Nov. 28 is Independence Day number three (this one celebrating freedom from Spain).

Dec. 8 is Mother's Day, serious holiday in this country, when, again, all businesses and most shops are closed so everyone can spend the day with Mom.

The country shuts down for Christmas on Dec. 24 and 25, for New Year's Day on Jan. 1, and then again on Jan. 9 for Martyr's Day.

Panama's biggest party of the year, Carnaval, takes place Feb. 13 to 16 (though, in fact, the celebrating extends for a full week at least).

Today, Good Friday, marks the official end. We've only stood on the sidelines watching all the celebrating and holidaying that has taken place all around us over the past five months, but we're exhausted and look forward to getting back to business full-time, holiday-free, starting Monday.

"Not so fast," points out Panama Editor Rebecca Tyre. "Don't forget the Labor Day holiday weekend the first of May..." "Kathleen, it has been a while since my wonderful visit to Panama to attend your Live and Invest Overseas event in Panama City. I have many fond memories of my time with the group. I received extraordinarily valuable information and made lasting contacts.

"I have been reading your newsletters with interest. Always excellent content! I recall some of your reports dealing with an area in the south of France that you identified as a good place to retire. My wife and I will be visiting France this summer and would like to get familiar with the region. Can you recommend an itinerary that will give us a good exposure and understanding of the area and its opportunities?

"I appreciate being on your mailing list and hope to attend another event of yours soon."

-- Ken W., United States

Thanks very much for your kind words and support. Your best option for getting to know about retirement opportunities in France, including in the Bearn region at the foothills of the Pyrenees that we've been telling you about recently, would be to join us for our Live & Invest in France Conference, scheduled for July 22-23 in Paris.

France Correspondent Lucy Culpepper, whose full report on life in this country's southwest is featured in the current issue of the Overseas Retirement Letter, will join us to speak firsthand to the group about everything from cost of living in her favorite corner of this country to health care, finding a rental, opening a bank account, making friends, and soaking up the best of French country life.

We'll publish full details of our upcoming France program later this month. Right now you still have time to get your name on the list for pre-registration discounts. You can do that here.

Editor's Note: If you're not yet an Overseas Retirement Letter subscriber, you can become one here now in time to receive Lucy's full report on the good life in Bearn.