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Buying a Vacation Home Overseas

One of the greatest luxuries and perhaps among the savviest investments you can make to diversify your wealth is to buy a vacation home in another country. This is lifestyle at its finest, to own a place where you can enjoy your favorite culture, weather, and activities.  But buying a home overseas is more complex than buying in the U.S., but these hurdles can easily be overcome with knowledge and preparation. 


If you plan to purchase a vacation home using a mortgage, you’ll find that some places either don’t have mortgage lending available, impose higher interest rates, or the terms are stricter, such as requiring hefty down payments of 30% to 50% of the property’s value, according to If you qualify for an overseas loan, you may be required to carry life insurance with the lender as beneficiary. Further, most U.S. banks won’t lend money for foreign investment homes, but there are other ways you can accomplish your goals. 

You can always pay cash, but only if the property is already built. If you buy with a developer who also acts as the financier, you can pay payments in stages – when you sign the contract and during agreed-upon phases of construction completion. You can also purchase with a self-directed IRA, which allows for investment in a broader set of assets, including foreign property – but not for use as a home. You can live in your home once you reach the age that you can start taking mandatory distributions from the IRA account. 

Be prepared for additional transaction costs, such as a property transfer fee or stamp duty that can add 10% or more to the sales price, as well as other fees. It’s advisable to have a real estate attorney, tax advisor, and an estate planner both in the U.S. and the country where you’re purchasing a home in order to protect your property investment. 

Taxes advises that foreign vacation homes owned under the individual title (not purchased through a partnership, corporation, trust or other entity) and used only for personal enjoyment rather than to produce income won’t be taxed in the U.S. unless you sell the property at a profit. In that event, you’ll only pay capital gains, but be aware that the country where you purchased property may have taxes due such as property taxes, recording taxes and stamp taxes, as well as other rules about how the proceeds are handled. 

Although many American banks will not lend money for foreign homes, ironically, the interest you pay on your foreign home’s mortgage is tax- deductible in the U.S. if the principal is $750,000 or less. In 2025, the ceiling is scheduled to rise to $1 million. 

If you’d like more information, Berkshire Hathaway HomeServices is expanding their services across the world, and currently have offices in Canada, Mexico, Germany, England, Italy, Spain, Greece, Dubai, and India. Contact your Berkshire Hathaway HomeServices network professional for a referral to an overseas affiliate.