“Kathleen, regarding buying real estate overseas…
“Can it be taken as a tax write-off?
“Can you get it financed through any U.S. banks, or should you even do that?
“Looking to invest. Thank you. I have enjoyed your letters for about two years now.”
–Bob M., United States
The real estate purchase or asset itself isn’t a tax write-off. However, in the case of a rental property, you can write off all related expenses (including travel to the property to check on it, repair it, etc.) against rental income.
In addition, if you’re renting out the property and have a loss, you can write off any passive losses against passive income, just as with a U.S. rental property, and you can write off the loss against active income if you manage the rental yourself.
You won’t likely find a U.S. bank to lend on property not in the United States, though some Texas banks were lending for the purchase of property in Mexico a few years ago (I don’t think this is still a possibility). Historically, one option was to borrow in the States against equity in U.S. property then use those funds to buy overseas. With equity positions upside-down in many cases in the United States these days, that isn’t as viable an option.
The good news is that it is possible to get financing in some markets overseas (we’re including a special workshop and panel discussion on opportunities for this as part of our Global Property Summit next April), though the terms will be less favorable than you’re used to in the States.
Continue reading: Buying A Second Home Overseas