Expats, beware these property ownership pitfalls

We are South Africans working abroad with all our savings in our offshore bank.

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As we sold our property when we left SA and no longer own a house, we are thinking of buying a property in Europe and using it as an Airbnb. This should provide us with a better return than we are getting at the bank. Is this wise, or should we do something else?

There are several important factors to weigh up before you buy property abroad. What appears to be a straightforward investment can become complex - and sometimes costly - if not carefully structured.

Understand the tax landscape

Offshore property ownership often comes with layered taxation. Beyond the purchase price, you may be liable for municipal, regional and national taxes, as well as regular property levies.

Rental income is also typically taxed in the country where the property is located, sometimes at higher rates for nonresidents. If you eventually sell, capital gains tax could also apply according to local laws.

Before committing, consult a professional who understands both the local tax framework and the cross-border implications. This step can prevent unpleasant surprises that erode the returns you were expecting.

Beware of situs tax on death