Real Estate Investor Magazine South Africa June 2015 | Page 56

FOREX Moving Foreign Funds What to be aware of when exchanging and moving foreign currency internationally BY ANDREW RISSIK Y our reason for buying overseas property will have a direct influence on everything from your budget, how you move your funds to the type of property you invest in. You must also understand the value of local currency and exchange rates. If you send money from South Africa, you will need to consider local exchange control regulations. Whilst an individual can now send R10 million offshore for investment purposes, South African Revenue Service (SARS) have yet to adjust their systems to this recent relaxation. The delays as a result can materially prejudice your ability to complete a property purchase transaction resulting in heavy penalties. “ You must be cautious around issues such as property ownership.” You must always bear in mind when investing offshore the effect of currency fluctuations. Take for instance a South African investor, who took a US$ based mortgage in 2011, and relied on his South African income to service the shortfall between his offshore rental income and the offshore mortgage repayment. When the Rand weakened dramatically against the Dollar, he found it difficult to make ends meet. The need for offshore finance and funding is a far more challenging exercise, due to the fact that it will be subject to international laws and based in a local currency. 54 JUNE 2015 SA Real Estate Investor Once you have made the decision to invest abroad it makes sense to open a local bank account. This makes it far easier to receive rental income and pay local taxes, legal fees and other property associated costs. This must be considered as a crucial part of your preparation. Any surplus income can then be easily managed in the foreign country. If you have a substantial surplus and want to repatriate it to South Africa this can easily be arranged, as opposed to making several small payments. You must be cautious around issues such as property ownership, especially if there is debt that exists on a property. For example, if a developer has previously borrowed money to complete the work and has not repaid this you, as the new owner, may be liable to pay back the money owed. Everyone’s tax circumstances are different, and this is especially true in the internationally diverse property market. Each country has its own unique tax laws, which may require you to pay costs such as stamp duty and transfer tax at the point of purchase. These potential costs must also be factored into your budget. Whether you intend to relocate or develop an international property investment portfolio, things can go wrong. You will therefore need a suitable exit strategy, as this will minimize the potential for financial loss. Before you externalise funds from the country after liquidating the investment, you need to ensure you have paid all local taxes. You must always take investment advice from a financial adviser who specialises in expat investments. Sable Forex can cost effectively assist you to move your money out of South Africa and between several international jurisdictions. RESOURCES Sable Forex www.reimag.co.za