Monday, March 3, 2014

Investing in the U.S. or Spain: Foreign Brick under the microscope

The notion of " good family " varies according to time and circumstances. So is it for investment . Risk and balance, better now putting money into foreign brick guaranteed return on a savings account . But not anywhere.

Can we still consider putting money on a savings account or government bonds , which relate yet less than inflation , a commendable attitude to a father who takes care of his family ? Convinced of the contrary , more and more investors - cautious for the majority - are moving to other forms of investment and choose to invest in real estate abroad, particularly in Spain and the United States, two countries where the recent discount multiplies opportunities for solid gains.

But be careful not to drop the substance for the shadow . With the help of Jean- Marc Goossens, Brussels Bar specializes in the sale of real estate in the U.S. , here's something to help you ask the right course .

To identify the best possible risks before proceeding to act, we have taken as revealing six key market parameters .

1 . The real estate prices and the importance of their recent discount

In Spain , the latest figures show a 35% decline since late 2007. In the United States , prices have declined on average to the same extent . " But its size and disparity, the U.S. housing market has however experienced in some cities even stronger variations and allows a much larger choice of products and varied ," says Jean- Marc Goossens . Finally, despite its difficulties, the euro remains strong against the dollar on the foreign exchange market. And the current parity increases its purchasing power in the United States . "In addition, during the subsequent resale of the property, the investor will have the opportunity to stay in dollars and euros will return to when the rate is favorable ," said the lawyer.

2 . The current price trends

In Spain , prices continue to fall. This year is still expected a decline of about 8%. In the United States, the average price of new homes is ironed in one year from 260,000 to 313,000 dollars , annual home sales rose 60% ​​, building permits from 25 to 70 %. "I see more and more requests for funds that enable diversified investments from " small " amounts ( $ 50,000 ) . The typical client is an individual with modest incomes or who seeks an institutional performance , " says Jean -Marc Goossens .

3 . Forecasts of capital gains term

The austerity policy in Europe shows its limits , but Spain has seen more alternative financial fragility: incentives for home ownership have been removed and demand is sluggish, more than one two young people is unemployed and therefore excluded from acquisitive market. Industry professionals believe it will take five years to stabilize the market and hope for a return to bullish values.

With a seemingly more lenient policy , the United States fared much better. Growth remained around 2% , deficits are reduced : they still exceed 5% of GDP currently , they should fall below 3% from 2015. Job creation and the housing market still confirms a steady recovery for months.

4 . The rental income

In Spain , the rental market also suffers the brunt of increasing flexibility in the labor market and the declining purchasing power of families , especially in cities where rents were significantly increased before the crisis. Given this uncertainty the side of the financial security of a significant proportion of tenants, many owners do not reach that yield the floor.

"In the United States, it is very easy to rent a quality property . Americans move and move a lot , but unlike the Spaniards forced to do to get a job at a discount, if they do not hesitate to thousands of miles for a job, it is often by choice, to improve their standard of living , and their common language facilitates this flexibility on a huge space. Furthermore, since the subprime crisis , they get very difficult credit and praise even more so by swelling demand and prices. Net rental yields are obviously variables given the extent of the market, but they are usually between 3 % and 15% , "explains Jean- Marc Goossens .

5 . Legal certainty

In Spain in crisis, the risk of failure is great promoters . "The profession of estate agent does not require access to the profession and notaries have no obligation - as in Belgium - check if the property is secured by a mortgage or if the owner has tax debts. In addition, the tenant is protected by law in relation to the lessor. Permanent assistance of a lawyer is essential , "says Belgian lawyer .

In the United States , by cons , the market is in the process of sanitation, professions real estate agent, closing agent ( attorney acting as notary) and title company (which guarantees the title) are strictly regulated . And overseas , it is the owners who are very protected.

6 . taxation

Spain :
acquisition costs amounted to approximately 13% of the purchase price ( notary fees, registration fees , stamp ) .
rental income is taxed at 24%.
the gain is taxed at 21%.
property tax (IBI ) is about 1% of the assessed value ( undervalued ) with a fee of 0.2 to 2.5 % on assets above 700,000 euros .

United States :
fees to the purchase does not exceed 3% .
rental income is taxed at 15 %, but deductions are so numerous that they virtually erase the tax.
the gain is taxed at 15%.
Property Tax ( Property Tax ), allow approximately 1-2 % of the value according to the states.
U.S. out yet big winners in this comparison six points. Should we therefore not recommended to buy in Spain? This obviously depends on your goals . If you wish to make a financial investment with maximum security and aim at a quick profit (yield + capital gains ) , the United States is an ideal destination today. But the statistics are improving from month to month , the windfall decreases in proportion to the lower financial risk.

If, against , looking for a relatively close second home that you personally want to enjoy and you intend to keep (very) long-term investment in Spain may be preferable. But in this case , do not rush : prices continue to fall. Whatever side of the Atlantic selected , a real estate investment abroad is always a complex and risky operation , which requires the advice and assistance of a specialist. It can also provide information on the benefits of the possible constitution of a company , on the possibilities of tax and estate planning ... and , if necessary , on immigration opportunities.

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