The question of what to do with one's home country's property is a difficult one for most potential ex-pats. Should you rent out or sell your home when moving overseas? Not only are the finances complicated, but selling the home you've lived in for decades may also be emotionally draining. Bear in mind that it's necessary to sit down and thoroughly consider your options. Selling or renting your home could be the most important financial decision you will probably make in your life. It pays to get it right the first time. In this post, we'll go through the advantages and disadvantages of the two most common options: selling your home altogether before going overseas or renting it out and using it as a source of income while living in another country. So, let's start.
First things first - before deciding to rent out or sell your home when moving overseas
If you're considering moving abroad, pre-visit the place where you'll be relocating. This isn't always possible, but if it is, it's the ideal approach to learn more about what you're going to embark on and what you need to prepare for. After all, if you want to buy a property overseas, you don’t want to make any rash decisions.
Also, don't forget to do thorough research and carefully choose a professional moving company. If you want to ship your car, make sure you're familiar with the customs regulations. There are many car shipping mistakes you would be best off avoiding. So, be careful when transferring your vehicle because it may cost you a lot. In addition, check with your movers if there is something you cannot relocate. Depending where you are moving to, you may not be allowed to move some items, such as particular plants. Moreover, if you are moving with your pet, there a whole other array of rules and regulations to check.
As you can see, there is a lot to research. So, make sure you do your homework first and discuss everything with your movers.
Selling your home
Selling your home appears to be a logical choice for most people relocating overseas. There are several compelling reasons for this.
You'll have a lump sum to help you start your new life after selling your property. That's a positive thing. The best and most obvious use of that money is to purchase a new home in your desired location. If home prices are lower there (as they often are), there should be enough money to live on.
However, it is not advisable to buy a new property in your new country right away. New ex-pats overseas are advised to rent for at least a year or two in their new country of residence before purchasing a property. You have to agree; that totally makes sense. You can put your money to better use. When you are relocating overseas, there may be more tax-effective investments (bear in mind that it depends on the tax regime you are moving to) or better-performing asset classes. Still, you may wish to utilize the funds to purchase a home in another country rather than renting.
There is one more reason you should consider selling your home. Due to its location, style, and other factors, your home may be difficult to rent.
If you do decide to sell your house, don't forget about staging it. It will make the process much easier, especially if you follow some steps for house staging.
Be aware that there may be downsides when it comes to selling your home. The most obvious reason is that many ex-pats do not intend to stay in their native country indefinitely. Circumstances change, and for various reasons, the majority of ex-pats return home within a few years. If you've sold your home, returning home may be more complex and costly. It's also crucial to consider the genuine worth of your property. While selling your home can supply you with a large lump sum of money, it may not provide you with the best possible profit. Renting it out could be a better option, as it will give a steady stream of revenue over time.
It may be wise to keep your home till after you have lived abroad for a while. This way, if you decide that living as an ex-pat isn't for you, you may easily return home.
Renting out your property, at least initially, might be a good option before you see what's out there.
Renting your home
Renting your home while you're abroad can help you generate extra money (sometimes in a different currency than the one you'll be earning in your new location) while also allowing you to keep your assets. To make sure you're successful in renting your property, check out our tips on calculating a rental property's value.
You might be able to rent the house partially or fully furnished (for a somewhat higher rate) and avoid having to ship, sell, or store your stuff. Rental property depreciation, tax deductions (for things like maintenance and property management), and negative gearing benefits from the option to accrue any tax losses for use when you return home are all possible tax benefits of renting out your home.
Many people (especially those who have never owned real estate) are concerned that renting their home to strangers would cause damage or that they will receive phone calls in the middle of the night about a leaking roof. They also worry about being unable to evict a troublesome tenant. Most of the difficulties that individuals are concerned about can be resolved by hiring a good property manager or purchasing suitable insurance. Many real estate agencies provide property management services that can reduce your stress and take care of the housekeeping, rent, and any other concerns with your rental contract while you are overseas.
Moreover, if you decide to return to your homeland, you can reside in your old house.
Finding proper property management can be challenging at times. Also, your house may not be looked after as well as you would do it. You should keep in mind that you cannot ensure that tenants always occupy your property, which could put you in financial trouble if you have a large mortgage.
Furthermore, the administration associated with managing the rental may not be acceptable for people who prefer to make a fresh start in a new country while maintaining ties to their home country. In addition to everything mentioned above, some state governments raise the land tax that foreign resident landlords must pay.
Tough choice, isn't it?
It might be challenging to decide whether to rent out or sell your home when moving overseas. Still, with some research, professional assistance, and careful evaluation of your unique circumstances, you can make an informed financial decision. After all, bear in mind that emotion and nostalgia are two things that exist outside of money. Many people's financial considerations of renting or selling their homes will be overshadowed by their emotional attachments to their homeland.