Buying vacation home in New Zealand

[earlyretirement]

I agree with the others to really take a good look at your motivations for the purchase including how much time you will spend there each year if it’s for your vacation use.

I’m not saying that buying real estate overseas is a bad idea because it many times can be great. I personally own multiple properties outside of the USA in various countries that I use as vacation rental properties (not for my use but to rent out to tourists).

You just have to keep in mind that being an owner out of the country so far away is NOT for everyone. Being a property owner on international property can be a REAL pain in the ass if you don’t have a good property manager. Really on ANY rental property a good property manager is essential but especially internationally when it’s located so far away.

It’s not like you can easily get on a plane and solve any emergencies easily. Make sure you get MANY (at least 10) references for the property manager that you will use for the property you are buying.

Also, make sure you FULLY understand ALL the laws in the country you are buying in. Many countries the laws and tax laws are totally different for non-residents vs. residents so make sure you fully understand those things.

Make sure you understand all the various taxes due and payable as I own properties in some countries where you get NO property tax bill in the mail. It’s your responsibility to file a property tax each year with no notices.

I strongly recommend you find a solid accountant and lawyer that deals with foreigners/non-resident issues because the laws are often different for one vs. others. Sometimes drastically different so you need to look at that.

And as far as your income stream, make sure you keep very detailed notes of all income. As an American you are required to report any income to the IRS. So keep in mind that many incoming wire transfers from abroad can often times trigger a bank to report the activity. So keep that in mind.

Also, make sure you get a full extensive power of attorney for your property manager to act on your behalf. If not, many utility companies, buildings, HOA administrations, etc. won’t let them act on your behalf without a legal POA. Make sure to see if any special legalizations are needed for the power of attorney. Many countries they are not valid unless they are done there by a lawyer in that country or it is Apostillized if you’re in the USA and sending it in.

Also, make sure you are fully insured. I know that sounds like common sense but in many foreign countries where I bought, there wasn’t mortgages and they were cash deals and in cash deals, NO ONE cares if you have insurance so many foreigners forget to insure the property against major loss.

Really take a SOLID look at the expenses, property management fees of the property manager, annual property taxes, other taxes, taxes on the rental income, insurance costs, utility bills, costs for maid service and laundry services to get the property ready for the next guest or to service guests during their stays if you’re including it. So many realtors overseas underestimate total ownership fees and expenses and many of them don’t touch upon the tax issues for non-residents.

I can’t speak for New Zealand as I’ve never purchased there but have purchased in different countries so I have a lot of experience on this.

I can’t emphasize enough to get at least 10 references from current owners (preferably several American) from whomever you will use to manage your rentals. Make sure that company has been around a while and also operating totally legally (many companies are simply some guy that set up a website and not paying any taxes, not a legitimate corporation, etc.).

Also, on the rental contract that will be used on your property, DEMAND that it not only releases the property management company but especially you from any liability if any rental guests get hurt in your property for ANY reason. That is so essential so demand that every single rental in your property has that clause signed by the rental guest.

Also, in your property management contract with the manager, also put that clause in as well. The last thing you want is liability in case of any accidents so go that extra mile to protect yourself as much as you can.

People often rush into vacation rentals in other countries without doing all the due diligence before buying. Realtors often times don’t give you all the facts and the laws and information (no offense realtors) so you have to do it yourself.

Again, I’m not saying that overseas ownership is a bad idea. But I know it’s not for a vast majority of the people out there. So just really take note of the things I mentioned above.

Also, something REALLY important is to get a letter from the building administrator or company managing the building stating that vacation rentals are not prohibited and get a copy of the by-laws of the building and have your attorney handling the purchase review it and make sure that indeed there is nothing restricting vacation rentals in that building. Get an opinion letter from him/her and have them sign it.

This is essential. I’ve talked to Americans that purchased million dollar + apartments as an investment for a rental property only to find out after closing they can’t rent it out. So make sure to research that on the front end before you buy.

As well, in your offer make it conditional on nothing respecting vacation rentals in the unit/building. Also, make sure to get an inspection from an architect/inspector/engineer/etc. Make that a condition of the purchase as well. I know it’s common in the USA but it’s not common in many countries.

Also, an EXCELLENT investment is to invest in getting an electronic lock on the door from Schlage. There is a wi-fi model that sends you an email each time someone goes in and out. As well Panasonic has an excellent web camera that you can mount outside of your door to monitor entry into the apartment so you can see if the property manager or others are going in or out. They are GREAT and work with wi-fi and they can email you photos.

I’ve heard horror stories from other Americans that owned in foreign countries with some of them that caught the property management company living in their places without permission! Our renting the properties and not informing the owner. The chances for fraud and abuse are much much higher when you are halfway across the world.

In an ideal situation, you have family in that city that will manage it for you.

All this advice above is based on many many years of experience buying properties around the world and renting them out.

PS – a good idea is to ask to see copies of utility bills for the past 6 months for the property as well as HOA fees and statements and a letter from the company that administers/manages the building that there are no assessments scheduled. I know this seems like common sense but many people get outside of the USA and throw common sense out the window.

And utilities often times in other countries can be DRASTICALLY different vs. the USA so make sure to get the actual true numbers as realtors almost always lie about these amounts or just report what the seller is reporting which is often wrong.

I hope all this advice helps. Good luck!

[sdduuuude]

ER – what an awesome post. One of those Piggington gems. I feel like an expert now and I’m not even considering this.

[sdduuuude]

ER – what an awesome post. One of those Piggington gems. I feel like an expert now and I’m not even considering this.

[sdduuuude]

ER – what an awesome post. One of those Piggington gems. I feel like an expert now and I’m not even considering this.

[sdduuuude]

ER – what an awesome post. One of those Piggington gems. I feel like an expert now and I’m not even considering this.

[sdduuuude]

ER – what an awesome post. One of those Piggington gems. I feel like an expert now and I’m not even considering this.

[earlyretirement]

[quote=sdduuuude]ER – what an awesome post. One of those Piggington gems. I feel like an expert now and I’m not even considering this.[/quote]

Thanks sdduuuude!

I really feel that knowledge is power and truly believe in the sharing of information with other people. That’s what these online message boards are all about. Sharing information.

Of course there are other factors with buying property overseas but I tried to list all of the most important things I’ve learned through the years. I’ve purchased hundreds of properties outside of the USA for myself and my clients and always avoided problems following these things above and doing lots of due diligence as well as always following the laws in that foreign country and paying any taxes that might be due on the property and the rental income.

One thing I also forgot to list is to see on the front end what all is involved in selling your property as a foreigner/non-resident. Even though you don’t plan to sell in the immediate future, it’s still wise to understand what is involved with selling your property and exiting your investment.

Buying a property to live in as a home and buying as an investment are totally different things so you always need to be aware of your exit plan and strategy.

Some countries I’ve purchased in, for example, they have one set of laws for locals selling and another set of laws for non-residents (Americans) selling. It sounds totally crazy but true. Some countries you have to apply for a permit to sell which can take months, you have to hire an accountant and they pour over your tax history to make sure you’ve been paying income tax on the rental income as well as the property taxes each year you owned the property.

So be VERY careful with taxes as you might not be able to sell even if you/your accountant made a mistake. That’s why it’s essential to use accountants and lawyers that specialize with non-resident foreigners.

Also, something I forgot to mention is to take the time to investigate whether it makes sense to buy as an individual or set up a corporation in the purchase. Sometimes it makes sense to set up a corporation but many other times it simply doesn’t due to additional taxes and expenses.

Some countries you have 0% capital gains tax when you sell if you buy as an individual but as high as 35% capital gains tax if you buy as a corporation.

Also, it’s a good idea if you can to open up a local bank account in the country you are going to own property. Sometimes it’s not easy to pay bills/utilities unless you are doing automatic debits. Sure, your property manager will pay bills but it’s always a good idea to have a bank account where you can have your rental income deposited.

Because most property managers will charge you a fee to wire an international wire which can add up. But if you have a local account, you can simply ask them to deposit funds into your local bank account as you get rentals. It won’t cost you anything..

If you do, stick with larger banks like HSBC, which has branches just about everywhere in the world I’ve been. If you’re an HSBC Premier member, you can transfer funds between your accounts and not pay any fees at all which is convenient. Plus you can monitor your accounts in that country online.

As I mentioned above, multiple international wire transfers into your USA bank accounts will cause red flags.

If you do open a bank account abroad, just keep in mind it’s a good idea to keep less than $10,000 US in it. Once you go above $10,000 , you are obligated by law to fill out a special form ( TD F 90-22.1) with the Department of the Treasury. If you stay under $10,000 you don’t have to report it so keep this in mind. Having overseas offshore accounts also causes red flags for audits.

If you open an account at a larger bank like HSBC, they will issue you a Visa debit card so you can use it to shop or withdraw cash to keep your balance under $10,000 at all times.

Remember it’s perfectly LEGAL to have offshore bank accounts. The US government can’t do anything about that. But you have to play within their rules. If you have over $10,000 you MUST report it.

So look into all of those things. Buying real estate overseas is serious business and ALL of these things should be investigated on the front end before you buy in a particular country.

Best.

[earlyretirement]

[quote=sdduuuude]ER – what an awesome post. One of those Piggington gems. I feel like an expert now and I’m not even considering this.[/quote]

Thanks sdduuuude!

I really feel that knowledge is power and truly believe in the sharing of information with other people. That’s what these online message boards are all about. Sharing information.

Of course there are other factors with buying property overseas but I tried to list all of the most important things I’ve learned through the years. I’ve purchased hundreds of properties outside of the USA for myself and my clients and always avoided problems following these things above and doing lots of due diligence as well as always following the laws in that foreign country and paying any taxes that might be due on the property and the rental income.

One thing I also forgot to list is to see on the front end what all is involved in selling your property as a foreigner/non-resident. Even though you don’t plan to sell in the immediate future, it’s still wise to understand what is involved with selling your property and exiting your investment.

Buying a property to live in as a home and buying as an investment are totally different things so you always need to be aware of your exit plan and strategy.

Some countries I’ve purchased in, for example, they have one set of laws for locals selling and another set of laws for non-residents (Americans) selling. It sounds totally crazy but true. Some countries you have to apply for a permit to sell which can take months, you have to hire an accountant and they pour over your tax history to make sure you’ve been paying income tax on the rental income as well as the property taxes each year you owned the property.

So be VERY careful with taxes as you might not be able to sell even if you/your accountant made a mistake. That’s why it’s essential to use accountants and lawyers that specialize with non-resident foreigners.

Also, something I forgot to mention is to take the time to investigate whether it makes sense to buy as an individual or set up a corporation in the purchase. Sometimes it makes sense to set up a corporation but many other times it simply doesn’t due to additional taxes and expenses.

Some countries you have 0% capital gains tax when you sell if you buy as an individual but as high as 35% capital gains tax if you buy as a corporation.

Also, it’s a good idea if you can to open up a local bank account in the country you are going to own property. Sometimes it’s not easy to pay bills/utilities unless you are doing automatic debits. Sure, your property manager will pay bills but it’s always a good idea to have a bank account where you can have your rental income deposited.

Because most property managers will charge you a fee to wire an international wire which can add up. But if you have a local account, you can simply ask them to deposit funds into your local bank account as you get rentals. It won’t cost you anything..

If you do, stick with larger banks like HSBC, which has branches just about everywhere in the world I’ve been. If you’re an HSBC Premier member, you can transfer funds between your accounts and not pay any fees at all which is convenient. Plus you can monitor your accounts in that country online.

As I mentioned above, multiple international wire transfers into your USA bank accounts will cause red flags.

If you do open a bank account abroad, just keep in mind it’s a good idea to keep less than $10,000 US in it. Once you go above $10,000 , you are obligated by law to fill out a special form ( TD F 90-22.1) with the Department of the Treasury. If you stay under $10,000 you don’t have to report it so keep this in mind. Having overseas offshore accounts also causes red flags for audits.

If you open an account at a larger bank like HSBC, they will issue you a Visa debit card so you can use it to shop or withdraw cash to keep your balance under $10,000 at all times.

Remember it’s perfectly LEGAL to have offshore bank accounts. The US government can’t do anything about that. But you have to play within their rules. If you have over $10,000 you MUST report it.

So look into all of those things. Buying real estate overseas is serious business and ALL of these things should be investigated on the front end before you buy in a particular country.

Best.

[earlyretirement]

[quote=sdduuuude]ER – what an awesome post. One of those Piggington gems. I feel like an expert now and I’m not even considering this.[/quote]

Thanks sdduuuude!

I really feel that knowledge is power and truly believe in the sharing of information with other people. That’s what these online message boards are all about. Sharing information.

Of course there are other factors with buying property overseas but I tried to list all of the most important things I’ve learned through the years. I’ve purchased hundreds of properties outside of the USA for myself and my clients and always avoided problems following these things above and doing lots of due diligence as well as always following the laws in that foreign country and paying any taxes that might be due on the property and the rental income.

One thing I also forgot to list is to see on the front end what all is involved in selling your property as a foreigner/non-resident. Even though you don’t plan to sell in the immediate future, it’s still wise to understand what is involved with selling your property and exiting your investment.

Buying a property to live in as a home and buying as an investment are totally different things so you always need to be aware of your exit plan and strategy.

Some countries I’ve purchased in, for example, they have one set of laws for locals selling and another set of laws for non-residents (Americans) selling. It sounds totally crazy but true. Some countries you have to apply for a permit to sell which can take months, you have to hire an accountant and they pour over your tax history to make sure you’ve been paying income tax on the rental income as well as the property taxes each year you owned the property.

So be VERY careful with taxes as you might not be able to sell even if you/your accountant made a mistake. That’s why it’s essential to use accountants and lawyers that specialize with non-resident foreigners.

Also, something I forgot to mention is to take the time to investigate whether it makes sense to buy as an individual or set up a corporation in the purchase. Sometimes it makes sense to set up a corporation but many other times it simply doesn’t due to additional taxes and expenses.

Some countries you have 0% capital gains tax when you sell if you buy as an individual but as high as 35% capital gains tax if you buy as a corporation.

Also, it’s a good idea if you can to open up a local bank account in the country you are going to own property. Sometimes it’s not easy to pay bills/utilities unless you are doing automatic debits. Sure, your property manager will pay bills but it’s always a good idea to have a bank account where you can have your rental income deposited.

Because most property managers will charge you a fee to wire an international wire which can add up. But if you have a local account, you can simply ask them to deposit funds into your local bank account as you get rentals. It won’t cost you anything..

If you do, stick with larger banks like HSBC, which has branches just about everywhere in the world I’ve been. If you’re an HSBC Premier member, you can transfer funds between your accounts and not pay any fees at all which is convenient. Plus you can monitor your accounts in that country online.

As I mentioned above, multiple international wire transfers into your USA bank accounts will cause red flags.

If you do open a bank account abroad, just keep in mind it’s a good idea to keep less than $10,000 US in it. Once you go above $10,000 , you are obligated by law to fill out a special form ( TD F 90-22.1) with the Department of the Treasury. If you stay under $10,000 you don’t have to report it so keep this in mind. Having overseas offshore accounts also causes red flags for audits.

If you open an account at a larger bank like HSBC, they will issue you a Visa debit card so you can use it to shop or withdraw cash to keep your balance under $10,000 at all times.

Remember it’s perfectly LEGAL to have offshore bank accounts. The US government can’t do anything about that. But you have to play within their rules. If you have over $10,000 you MUST report it.

So look into all of those things. Buying real estate overseas is serious business and ALL of these things should be investigated on the front end before you buy in a particular country.

Best.

[earlyretirement]

[quote=sdduuuude]ER – what an awesome post. One of those Piggington gems. I feel like an expert now and I’m not even considering this.[/quote]

Thanks sdduuuude!

I really feel that knowledge is power and truly believe in the sharing of information with other people. That’s what these online message boards are all about. Sharing information.

Of course there are other factors with buying property overseas but I tried to list all of the most important things I’ve learned through the years. I’ve purchased hundreds of properties outside of the USA for myself and my clients and always avoided problems following these things above and doing lots of due diligence as well as always following the laws in that foreign country and paying any taxes that might be due on the property and the rental income.

One thing I also forgot to list is to see on the front end what all is involved in selling your property as a foreigner/non-resident. Even though you don’t plan to sell in the immediate future, it’s still wise to understand what is involved with selling your property and exiting your investment.

Buying a property to live in as a home and buying as an investment are totally different things so you always need to be aware of your exit plan and strategy.

Some countries I’ve purchased in, for example, they have one set of laws for locals selling and another set of laws for non-residents (Americans) selling. It sounds totally crazy but true. Some countries you have to apply for a permit to sell which can take months, you have to hire an accountant and they pour over your tax history to make sure you’ve been paying income tax on the rental income as well as the property taxes each year you owned the property.

So be VERY careful with taxes as you might not be able to sell even if you/your accountant made a mistake. That’s why it’s essential to use accountants and lawyers that specialize with non-resident foreigners.

Also, something I forgot to mention is to take the time to investigate whether it makes sense to buy as an individual or set up a corporation in the purchase. Sometimes it makes sense to set up a corporation but many other times it simply doesn’t due to additional taxes and expenses.

Some countries you have 0% capital gains tax when you sell if you buy as an individual but as high as 35% capital gains tax if you buy as a corporation.

Also, it’s a good idea if you can to open up a local bank account in the country you are going to own property. Sometimes it’s not easy to pay bills/utilities unless you are doing automatic debits. Sure, your property manager will pay bills but it’s always a good idea to have a bank account where you can have your rental income deposited.

Because most property managers will charge you a fee to wire an international wire which can add up. But if you have a local account, you can simply ask them to deposit funds into your local bank account as you get rentals. It won’t cost you anything..

If you do, stick with larger banks like HSBC, which has branches just about everywhere in the world I’ve been. If you’re an HSBC Premier member, you can transfer funds between your accounts and not pay any fees at all which is convenient. Plus you can monitor your accounts in that country online.

As I mentioned above, multiple international wire transfers into your USA bank accounts will cause red flags.

If you do open a bank account abroad, just keep in mind it’s a good idea to keep less than $10,000 US in it. Once you go above $10,000 , you are obligated by law to fill out a special form ( TD F 90-22.1) with the Department of the Treasury. If you stay under $10,000 you don’t have to report it so keep this in mind. Having overseas offshore accounts also causes red flags for audits.

If you open an account at a larger bank like HSBC, they will issue you a Visa debit card so you can use it to shop or withdraw cash to keep your balance under $10,000 at all times.

Remember it’s perfectly LEGAL to have offshore bank accounts. The US government can’t do anything about that. But you have to play within their rules. If you have over $10,000 you MUST report it.

So look into all of those things. Buying real estate overseas is serious business and ALL of these things should be investigated on the front end before you buy in a particular country.

Best.

[earlyretirement]

[quote=sdduuuude]ER – what an awesome post. One of those Piggington gems. I feel like an expert now and I’m not even considering this.[/quote]

Thanks sdduuuude!

I really feel that knowledge is power and truly believe in the sharing of information with other people. That’s what these online message boards are all about. Sharing information.

Of course there are other factors with buying property overseas but I tried to list all of the most important things I’ve learned through the years. I’ve purchased hundreds of properties outside of the USA for myself and my clients and always avoided problems following these things above and doing lots of due diligence as well as always following the laws in that foreign country and paying any taxes that might be due on the property and the rental income.

One thing I also forgot to list is to see on the front end what all is involved in selling your property as a foreigner/non-resident. Even though you don’t plan to sell in the immediate future, it’s still wise to understand what is involved with selling your property and exiting your investment.

Buying a property to live in as a home and buying as an investment are totally different things so you always need to be aware of your exit plan and strategy.

Some countries I’ve purchased in, for example, they have one set of laws for locals selling and another set of laws for non-residents (Americans) selling. It sounds totally crazy but true. Some countries you have to apply for a permit to sell which can take months, you have to hire an accountant and they pour over your tax history to make sure you’ve been paying income tax on the rental income as well as the property taxes each year you owned the property.

So be VERY careful with taxes as you might not be able to sell even if you/your accountant made a mistake. That’s why it’s essential to use accountants and lawyers that specialize with non-resident foreigners.

Also, something I forgot to mention is to take the time to investigate whether it makes sense to buy as an individual or set up a corporation in the purchase. Sometimes it makes sense to set up a corporation but many other times it simply doesn’t due to additional taxes and expenses.

Some countries you have 0% capital gains tax when you sell if you buy as an individual but as high as 35% capital gains tax if you buy as a corporation.

Also, it’s a good idea if you can to open up a local bank account in the country you are going to own property. Sometimes it’s not easy to pay bills/utilities unless you are doing automatic debits. Sure, your property manager will pay bills but it’s always a good idea to have a bank account where you can have your rental income deposited.

Because most property managers will charge you a fee to wire an international wire which can add up. But if you have a local account, you can simply ask them to deposit funds into your local bank account as you get rentals. It won’t cost you anything..

If you do, stick with larger banks like HSBC, which has branches just about everywhere in the world I’ve been. If you’re an HSBC Premier member, you can transfer funds between your accounts and not pay any fees at all which is convenient. Plus you can monitor your accounts in that country online.

As I mentioned above, multiple international wire transfers into your USA bank accounts will cause red flags.

If you do open a bank account abroad, just keep in mind it’s a good idea to keep less than $10,000 US in it. Once you go above $10,000 , you are obligated by law to fill out a special form ( TD F 90-22.1) with the Department of the Treasury. If you stay under $10,000 you don’t have to report it so keep this in mind. Having overseas offshore accounts also causes red flags for audits.

If you open an account at a larger bank like HSBC, they will issue you a Visa debit card so you can use it to shop or withdraw cash to keep your balance under $10,000 at all times.

Remember it’s perfectly LEGAL to have offshore bank accounts. The US government can’t do anything about that. But you have to play within their rules. If you have over $10,000 you MUST report it.

So look into all of those things. Buying real estate overseas is serious business and ALL of these things should be investigated on the front end before you buy in a particular country.

Best.

[masayako]

Thank you ER, this is the best post I’ve since in a long while. Thanks for the insight!

I do have relatives in NZ and I will also ask for their references for house hunting.

[masayako]

Thank you ER, this is the best post I’ve since in a long while. Thanks for the insight!

I do have relatives in NZ and I will also ask for their references for house hunting.

[masayako]

Thank you ER, this is the best post I’ve since in a long while. Thanks for the insight!

I do have relatives in NZ and I will also ask for their references for house hunting.

[masayako]

Thank you ER, this is the best post I’ve since in a long while. Thanks for the insight!

I do have relatives in NZ and I will also ask for their references for house hunting.

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