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Dublin, Ireland real estate investment and second residency

Ireland offers second residency – and a future second passport – to those who invest in distressed real estate in cities like Dublin.

The government is keeping a closer eye on your than many of your fellow citizens would have ever imagined. From banning cash to having details of your financial life at their beck and call, Big Government knows all when it comes to your money.

That’s why we repeatedly stress how important it is to internationalize your assets with offshore bank accounts and other tools that keep some of your assets out of the reach of your home country. Foreign real estate is one non-reportable asset that can help you do just that.

First of all, it should go without saying that there aren’t too many non-reportable financial assets out there. Governments, especially the US government, have made it their business to pry into every aspect of your life.

 

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Outside of offshore gold storage, foreign real estate is one of the few non-reportable asset classes. That means that whether you own a home, an apartment, land, or whatever outside of the United States, you don’t have to tell the government about it.

Contrast that with reporting requirements for offshore banking and owning real estate overseas may look pretty good to you.

Foreign real estate ownership is one way to get assets out of your home country and make them hard to confiscate. While it’s a lot harder to confiscate money held overseas, it’s theoretically possible for government thugs to demand funds from an offshore bank account be handed over to them – it’s just ones and zeros.

It’s not likely and would usually involve the foreign government authorities, who would determine the reason for the request.

But with real estate, it would practically take a declaration of war to demand your property.

If you’re buying real estate in a country that uses a different currency, you get the added benefit of currency diversification. With the US dollar on a downward trajectory for some time now, it couldn’t hurt to own some tangible assets denominated in another currency. Poland, which my friend Matthew Partridge thinks is a great long-term bet, saw its currency the zloty increase more than almost any other against the dollar in 2012.

Add that currency valuation together with Poland’s status last year as one of the top eight international real estate markets for appreciation and you’ve really got something.

I make no secret of the fact that I’m not very excited about real estate investing in The Land of the Free. In fact, I recommend against it.

In many parts of the country, everyone in their brother was a real estate investor to the point where it became the dumping ground for every lazy ex-bartender out there. A bunch of idiots paraded around town with their bling thinking things would never end.

Now that the market has allegedly bottomed out – at least for now – they’ll all back only in slightly muted fashion. But foreign real estate is often quite different.

Places like Cambodia are experiencing more rational real estate booms.

There’s not so much of a flipping culture there, and the growth is more understandable. In fact, the market is perhaps undervalued when you compare it to places like Singapore, Hong Kong, and Japan.

Other countries like China and Singapore can’t get enough of real estate, being it foreign or domestic. Many Asian cultures respect the tangible nature of a real estate investment. They just trust it.

While there certainly are some major bubbles in parts of Asia, there are other developing countries that are simply enjoying the appreciation that comes with increasing affluence.

If you’re looking to move or retire overseas, foreign real estate has the added benefit of offering a second residence in many cases. We recently talked about how to get a second residence in Portugal.

Anyone purchasing real estate worth €500,000 can get a Golden Residence Permit and put down roots in the country. Prices there have been knocked down as much as 13% by banks who want out of foreclosed properties. However, unlike their neighbors in Spain, the Portuguese never had the irrational exuberance that caused other world real estate markets to take it on the chin.

If you’re willing to risk catching a falling knife, Spain will let you move there for only a €160,000 real estate purchase. Just don’t expect to find a job there.

Ireland and Latvia also offer real estate investor residence programs, and are two great countries to live in despite being in the EU. In fact, if I had to choose one place in Europe to live (not bank, invest, or find a job), it would be Ireland.

If you’re a real estate investor seeking cash flow and appreciation, I’d say you’re more likely to find it in many places abroad than you would at home. European investors are flocking to places like Italy for bargains, driving prices in some areas up.

Germans, whose domestic real estate prices are some of the priciest in the world, are seeking refuge further south. Meanwhile, central American markets like Belize, which offers a familiar culture for Americans, are seeing appreciation.

If you want a passive income, some countries in Eastern Europe and southeast Asia offer excellent rental yields. I’ve seen averages as seen as 15-20% compared to as low as 3-4% in the United States or western Europe. That’s before appreciation.

Keep in mind that foreign source income is still taxable in the United States and any other country with a residential system of taxation, subject to a deduction of any tax paid overseas.

That means if you become an international landlord, the government will still want their cut of your profits. Also, any vehicle like a trust or offshore company is also reportable using the maximum value of the foreign real estate as the company’s value.

If you want the most privacy, be prepared to own the real estate in your own name.

Don’t confuse the real estate market in your home country with the opportunities abroad. Real estate investing in the US is cutthroat and leaves a lot to be desired.

However, there’s a much better case to be made for purchasing foreign property for your own use or perhaps even to rent.

If you’re looking to kill a few internationalization birds with one stone, owning real estate overseas can help you do just that.

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Andrew Henderson

Andrew Henderson

Andrew has been internationalizing since 2008, and has learned what works and what doesn't work when it comes to reducing taxes, increasing personal freedom, and creating wealth. Click here to work with him personally.
Andrew Henderson
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