The Tuscan sun will warm your soul, and you'll probably never eat
a bad meal in Provence. But if you want to buy a European villa
without spending a fortune, look south to Greece, Spain and
Portugal. Their economic misfortunes have forced sellers to slash
prices on vacation homes with panoramic views of the ocean, access
to golf courses and volumes of old-world charm.
There are few restrictions on U.S. citizens who want to buy vacation homes in southern Europe, but it is more complicated than buying a beach house on the Gulf of Mexico. You'll probably have to open a bank account in the country where the home is located to pay bills and local taxes. You'll also need to obtain a local identification number.
Be aware, too, that real estate practices differ from those in the U.S., says Joachim Wrang-Widen, of Christie's International Real Estate. It's not unusual for buyers in the U.S. to have their own real estate agent, but it's uncommon in southern Europe, he says, and it may be difficult to find a buyer's agent there.
If you open a foreign bank account to pay your bills, you'll probably have to file an annual Report of Foreign Bank and Financial Accounts (FBAR) with the U.S. Treasury. This form is mandatory if the total value of your foreign financial accounts exceeds $10,000 on any day during the calendar year.
Don't expect to buy your Mediterranean dream house with 10 percent or even 20 percent down. Like their counterparts in the U.S., European banks responded to the financial crisis by tightening credit standards. In Spain, nonresidents with good credit can get a mortgage for up to 60 percent of the value of a home, compared with 70 percent to 80 percent for residents, says Pia Arrieta Morales, a partner with Diana Morales Properties in Marbella.
Real estate agents say most foreign buyers pay cash.
Above all, don't let the charms of another country blind you to the drawbacks and risks of owning a home overseas. Visit the country several times before you make an offer. Never buy condos or other properties in an unfinished development, and don't buy anything you don't plan to keep for several years.
Sandra Block is a senior associated editor at Kiplinger's Personal Finance magazine.
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