You Really Can Physically Create Wealth Offshore: Part 2 of 2

In part 1 of this article, last week, I wrote about all the conditions favouring a move offshore for the highly taxed residents of countries like the UK, who might also be attracted by better weather, healthier food and a more relaxed lifestyle. I also wrote that foreign mortgages have become much easier to obtain in recent years, allowing you to profit from increasing house prices abroad if you buy well and in the right place.

Then I promised to answer this week “what are the factors that keep house prices on the up in a few select places, when all around us, we see prices stagnant or falling?”

In fact there are two separate offshore factors leading this trend.

The first is that we are talking here about destinations where people are buying second homes. People who buy second or third homes are relatively wealthy, and they are much more likely to buy in cash than first home buyers (It’s not even unknown for some naughty investors to be investing undeclared, untaxed cash!) Even if second home buyers purchase on credit, they probably won’t be scraping around having a hard time making payments. They can afford to sit tight for a few years and ride out any financial storms, which makes the price of this type of property much less volatile.

Even while their home economies are in recession, there will be a steady stream of Americans and Brits, Irish and Spanish (to name some of the most active investors), who have enough cash in the bank ready to buy a luxury house complete with pool on a palm-fringed beach somewhere, for the price of a small apartment back home.

The recession in the States and the falling value of the greenback won’t halt the trend, either. On the contrary, it will turn the expat brain drain and tax exile stream into a river. More and more wealthy Americans will move abroad looking for a better, cheaper - and lest we forget, healthier - lifestyle.

The declining US dollar makes property in the Caribbean and Latin America, which is still very much dollar based, a much more attractive option for those with pounds, euros, and Canadian dollars in their pockets. The Brits who used to buy in France or Italy are now being attracted by the relative good value of the Caribbean, and more direct flights (Virgin now has lots of direct scheduled flights from London to the Caribbean, for example) This in turn will keep prices in the region buoyant.

The second offshore factor is tax related. For those of moderate or greater wealth, the tax savings gained from expatriation can be huge. With smart use of offshore financial centres, income taxes can be slashed and inheritance tax almost eliminated, totally legally of course, even when the move is to a nominally high tax country like France or Thailand. If the move is to an established tax haven like Andorra, Belize or Panama (all highly attractive destinations in my view) then you can literally forget about taxes! I’ve talked to gringos who live very comfortable lives in Belize just on the money they were handing over to the taxman each year while they lived stateside.

Finally, though, the way to get the most out of your home, besides it providing shelter, is to enjoy it. In many cases, the best way to enjoy it is to sell it, buy cheaper but better shelter abroad, and pocket the difference. With a higher standard of living for a lower cost, with the excess cash carefully invested in a balanced portfolio to generate income and capital growth, and free of the stress of western society, you can begin to realise your dreams and your full business potential. Do things just for fun. Spend time with your loved ones. Make new friends. Learn a language. And take care of your health.

Look forward to more blog entries about Freedom, Wealth and Privacy. I hope you enjoy them and that you can use the information here to benefit your business and your life. In turn I would much appreciate your feedback, comments and questions. I can be contacted via info@petermacfarlane.net.

Peter Macfarlane is joint editor of The Q Wealth Report an established newsletter dedicated to informing readers about creating, protecting and growing wealth in a secure offshore environment. It also covers international living, banking, retiring and investing. Visit www.QWealthReport.com to see more.