Buying residential property abroad

Purchasing residential property in a foreign country is a complex but achievable goal for US citizens. The US government imposes no blanket restrictions on Americans owning property overseas, though individual countries may limit or condition foreign ownership.

43 steps across 12 sections

1. 1. Define Your Goals

  • Personal use (vacation home, retirement) vs. investment (rental income, appreciation) vs. relocation (primary residence).
  • Goals drive country choice, financing strategy, ownership structure, and tax planning.

2. 2. Research Target Countries

  • Ownership restrictions (freehold vs. leasehold, restricted zones, foreign-buyer bans).
  • Political stability, rule of law, property rights enforcement.
  • Cost of living, healthcare, infrastructure, expat community size.
  • Visa/residency pathways tied to property purchase (note: many "golden visa" programs have been ending — Spain ended its real-estate golden visa in 2025).

3. 3. Assemble Your Professional Team

  • Local real estate attorney (mandatory in most countries; some require a notary for all transactions).
  • Licensed real estate agent familiar with foreign-buyer transactions.
  • Tax advisor experienced in US international tax (FBAR, FATCA, foreign tax credits).
  • Currency exchange specialist (e.g., Wise, OFX, CurrencyFair) to minimize FX costs.
  • Local surveyor/inspector for property condition and boundary verification.

4. 4. Arrange Financing

  • Determine budget including all closing costs, taxes, and fees (can be 7-15% of purchase price).
  • Secure financing (see Financing section below).

5. 5. Conduct Due Diligence

  • Title search, encumbrance check, lien verification.
  • Zoning and land-use compliance.
  • Property survey and inspection.
  • Verify seller's legal authority to sell.
  • Check for outstanding taxes, utility debts, HOA/community fees.

6. 6. Make an Offer and Negotiate

  • Offers may be verbal or written depending on country norms.
  • In many countries, a preliminary contract (promesa de compraventa, compromis de vente, etc.) is signed with a deposit (typically 5-10%).

7. 7. Execute the Purchase

  • Final contract signed before a notary (required in civil-law countries like Mexico, France, Spain, Portugal).
  • Pay remaining balance plus closing costs.
  • Register the deed with the local land registry.

8. 8. Post-Purchase Compliance

  • File US tax forms (see Tax Implications below).
  • Set up property management if not residing there.
  • Obtain appropriate insurance.
  • Understand ongoing property tax obligations in the foreign country.

9. Mexico

  • Restricted Zone (Zona Restringida): Within 100 km of international borders and 50 km of coastlines, foreigners cannot hold direct title. Instead, they must use a fideicomiso — a bank trust where a Mexican bank holds nominal title whi...
  • Outside the restricted zone: Foreigners can hold direct fee-simple title.
  • Mexican corporation option: Foreigners can also purchase through a Mexican corporation, which can hold title anywhere, but this creates additional tax reporting (Form 5471 for the IRS).
  • Closing process: Involves a notario publico (government-appointed notary), who handles title search, tax calculations, and deed registration.

10. Thailand

  • Foreigners cannot own land. They can own condominium units (freehold) provided foreign ownership in any given condo building does not exceed 49% of total floor area.
  • Leasehold: Foreigners commonly lease land for 30-year terms (renewable, but renewals are not guaranteed by law).
  • Thai company structures: Some buyers set up Thai companies to hold land, but this is a legal gray area and increasingly scrutinized.

11. European Union Countries

  • Portugal: No restrictions on foreign ownership. Straightforward purchase process requiring a NIF (tax identification number). Golden Visa via real estate was terminated under the 2023 Mais Habitacao Law. Pro...
  • Spain: No nationality restrictions on property purchases. Golden Visa ended in 2025 (Organic Law 1/2025). Non-resident buyers pay a 3% retention on purchase price as a tax guarantee. NIE (foreigner ID num...
  • France: No restrictions. Notaire (notary) handles the entire transaction. Notary fees and transfer taxes total approximately 7-8% for existing properties. Preliminary contract (compromis de vente) followed...
  • Italy: Reciprocity principle — US citizens can buy because Italy and the US have reciprocal property rights. Process involves a preliminary contract (compromesso) and final deed (rogito) before a notary.
  • Greece: Restrictions in border areas and certain islands require special permission from the Ministry of Defense.

12. Southeast Asia

  • Indonesia: Foreigners cannot own freehold (Hak Milik). They can hold Right to Use (Hak Pakai) titles for 25-30 years, extendable. "Leasehold" arrangements of 25+ years are common.
  • Vietnam: Foreigners can own apartments (50-year leasehold, renewable once) but cannot own land. Maximum 30% foreign ownership per apartment building.
  • Philippines: Foreigners cannot own land but can own condominium units (up to 40% foreign ownership per building). Can lease land for up to 50 years (renewable for 25).
  • Cambodia: Foreigners cannot own land (constitutional prohibition). Can own condominium units above the ground floor.

Common Mistakes

  • Skipping the local attorney
  • Not understanding the ownership structure
  • Ignoring US tax obligations
  • Underestimating total costs
  • Wiring money through your bank instead of an FX specialist

Pro Tips

  • Open a local bank account early
  • Get a NIF/NIE/RFC (local tax ID) before you start
  • Use a power of attorney (POA) for closing
  • Consider a "trial run" rental
  • Factor in the Apostille Convention

Sources

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