Living abroad can bring you a lot of business and education opportunities. Still, every country has different living standards, some higher than others, and adapting to them can be quite the blow on our wallets. Finding ways to passively earn some cash is necessary to have financial support in unfamiliar surroundings.
Renting out a property for extra income while living abroad is a good idea since your place will be empty after you move. If you don’t plan to sell it, why not make some profit on it?
Do the research about renting options
Whatever the reason for renting your vacant home is, it will significantly reduce the financial pressure without having to work extra for it. There are a lot of options for the use of the finances. From helping you start your new life abroad to paying the house mortgage and insurance.
Without the financial burden, you can relax and dedicate your time to adapting to your new home. Every big change can be stressful, especially if we’re relocating to entirely different cultural settings. It’s imperative to learn about the new culture and embrace it in order to have the best experience while living abroad.
Still, unlike managing the property locally, doing it from a long distance can be overwhelming and frustrating. Therefore, if you want to find the most efficient way, make sure to consider all factors of potential complications.
Before deciding to rent out your home, notify the mortgage lender and insurance agency about your intentions. Sometimes there can be bans on renting out houses under a mortgage, so make sure all is in order to avoid any possible problems in the future.
Tax obligations when renting out a property
Many countries have taxes on worldwide income. That means any rental income, even the one you manage abroad, will be subject to taxes. Like any cash inflows and outflows, you need to report it.
Still, the tax deduction is given for some rental expenses in the form of capital allowances, mainly when it comes to:
- The managing agent, legal and accountants fees,
- Maintenance and repairs,
- Utility bills,
- Building insurance,
- Administration costs.
Countries that don’t have tax on property income
Before deciding on renting out the property for extra income while living abroad, make sure to research tax obligations, especially if you are becoming a resident of another country. Only several countries don’t have a taxable income:
- The United Arab Emirates,
- The Bahamas,
- and Qatar.
These countries have minimal or no tax income at all, and they are known as a popular expat and foreign investment destinations.
If you’ve already made the arrangements with your new tenants before you went abroad, you can relax to know you’re leaving your property in safe hands. However, if you didn’t manage to rent the home before you left, you can pay the agency to do it for you or do the search remotely.
Running credit and criminal background checks on potential tenants might seem a bit too much, but you have to know you’re leaving your property in the care of a reliable occupant, especially since you won’t be able to monitor it in person.
Sometimes it’s better to leave your home vacant for a while than rent it to irresponsible tenants.
Some arrangements can be made over the phone and video calls, but nothing beats a face-to-face meeting. Ask a friend to step in and do it for you.
Whatever you decide, it’s essential to prioritize tenants who intend to rent as long as possible. The rest of the legalities can easily be done online, but some things like business arrangements are best done in person.
Managing the property through agencies
As a long-distance landlord, you will have to decide how much involvement you want while renting out your home. The first option is to hire an agency that will do it for you. They can do all the work, from finding tenants and signing the contracts to organizing payments and management of the property.
And even though this option is hassle-free, it will be pricey. When not sure you can do all the work yourself, this might be the right choice. However, when looking for an agent to take care of this, check if they have experience with clients living abroad.
This will mean their potential additional involvement, like maintenance and occasional inspections.
Self-managing the property
Managing the property on your own from another country is practically impossible, especially if you can’t find a helping hand. If you can, find a reliable person who will do it with you. Whether they are family or friends, they can save you the trouble when it comes to sudden issues, certificates, and required emergency paperwork. By working together, you can create a great system.
Setting up automatic bank payments will solve the money issue, while your reliable person will be an “assistant” landlord on call for potential problems. However, make sure to put some cash aside at your helper’s disposal in cases of maintenance and repairs. Setting up an emergency fund is always wise, especially when it comes to rental income.
Protect yourself from your rental property
The quality written content of your lease can protect you from many troubles in the future. Most tenant-landlord laws favor tenants, so you need to carefully assemble the lease that will protect your interests.
By having a solid occupancy clause, you can be sure your property won’t become a squatter’s nest. Also, by adding a utility and over-use of utilities, property protection, subletting, and inspection clauses, you can be sure your home is protected from potentially huge expenses when it comes to mishandling the property.
When in doubt, consult an expert
When renting out a property for extra income while living abroad, it is crucial to have a signed and well-written lease agreement.
If you are not entirely certain how to handle the lease content, hire a landlord-tenant attorney or real estate agent. And even though some lease clauses are not fully enforceable, they will definitely help, especially if you find a reliable tenant who follows the rules.
Renting out a property for extra income while living abroad is a great way to solve your financial issues if handled the right way