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Whether you're eyeing a vacation home or exploring ways to diversify your investment portfolio, purchasing global real estate can make a lot of sense. Defining your goals is a critical first step. Are you buying for personal use, looking for tax advantages or seeking pure investment returns? Your motivations will influence where, what and how you buy.

Smart international real estate investing begins with careful research. The following considerations can help guide your process.

When weighing an investment in global real estate, start by researching the local economy and political situation in the locations you’re considering. Political and economic stability can be predictive of the long-term value of your property. Unstable regions can experience volatility, making it harder to manage or resell your asset.

When you’ve chosen a location, consult local experts, including real estate agents, attorneys and property managers who know the nuances of the local market. They can help guide you through the buying process and ensure you find a property that fits your goals. If you’re planning to rent out your property, for instance, they can help you make sure local zoning allows rentals.

The global real estate landscape is constantly evolving. Staying ahead means keeping a close eye on several key economic indicators. For instance, it's important to monitor inflation, as rising prices can significantly impact the cost of essential real estate components like labor and construction materials. In addition, fluctuations in interest rates can directly influence borrowing costs, potentially reshaping investment strategies. And changes in exchange rates can play a major role—especially for those looking to buy property overseas—by impacting purchasing power and overall affordability. Staying informed and adaptable can help you better navigate the shifting tides of the real estate market.

Climate resilience is also now a major factor in property valuation. Locations that can better withstand extreme weather are becoming more attractive to buyers and insurers alike, while properties in climate-vulnerable regions face rising insurance premiums and possible devaluation.

Technology is also reshaping the market. For instance, renters are increasingly looking for smart buildings with integrated systems, energy-efficient features and flexible workspaces, which in turn command higher rents and resale prices. If you’re looking to invest in rental property, you may want to consider options with modern assets that attract quality tenants and tend to appreciate faster.

Buying property abroad requires navigating complex legal and tax systems.

Every country has different property ownership laws, tax structures and reporting requirements. For example, some countries levy higher taxes on rental income for foreigners. Others impose strict ownership rules on non-citizens.

It’s also important to consider domestic tax obligations. Purchasing a home for personal use overseas may not represent a taxable event in the U.S., but collecting rent on a property might if you rent it out for more than 15 days a year.

You may deduct interest paid on a mortgage for a home overseas as well as depreciation, which uses a 30-year schedule for international property. If you rent out a property more than 15 days a year, you can deduct related expenses.

Working with an experienced legal advisor in the U.S. and in the country where you’re buying can help ensure you understand your responsibilities and avoid any potential pitfalls.

In addition to geopolitical risks and potential legal and tax implications, work with a financial advisor to factor in currency fluctuations and their potential impact on your investment. A strong dollar could help increase your buying power when purchasing real estate, but it could hurt your investment when it comes time to sell. Swings in currency value can also affect rental income, making cash flow less predictable.

Financing challenges are another consideration. The 30-year fixed-rate mortgage is largely unique to the U.S., whereas mortgages abroad often come with variable rates or shorter terms. For this reason, many Americans end up buying international real estate with liquid assets.

There are other options, including securities-backed loans secured in the U.S. to finance an overseas purchase. This method can be risky, however. If the value of your securities declines, you may need to pledge more collateral to maintain your loan-to-value ratio. Consider seeking expert advice about the best strategy for making your investment.

Buying property overseas can be personally and financially rewarding if you approach it with the right strategy. Understanding your goals, conducting due diligence and surrounding yourself with knowledgeable professionals, including an experienced financial advisor, can help make international real estate a meaningful part of your portfolio.