Real estate: no room for improvisation when buying abroad!

Buying in Mauritius

Mauritius has in recent years become a choice destination for foreigners wishing to invest in real estate. Attractive prices and significant tax advantages are its key attractions. More and more foreigners no longer hesitate to go ahead and buy a property that they then turn into a main residence, a secondary residence or a rental investment.

If you also want to embark on this adventure, here are the elements to take into consideration for a fully successful and safe purchase.

Go on an exploration trip

It is quite difficult to get a clear idea of a property when not on site: the geographical location, the legal rules, the environment, the setting, the social environment, the actual prices in the market and the specificities of the country. Checking all of these is even more important in case of a rental investment: any type of overpayment could distort the profitability of the purchase!

Turn to certified professionals

Each country has its own legislation on real estate purchase and property rights. In Mauritius, the Non Citizens Property Restriction Act regulates the real estate market reserved for foreign investors, consisting of luxury villas in full ownership, within hotel groups and in small buildings (R+2).

For a safe purchase, it is therefore essential to understand the rules and conditions. For instance, a local notary will be able to advise you not only on the purchase of a property on the island, but also on its management.

A successful and safe purchase

Succession

Succession is an important part of buying real estate abroad so as to avoid private international law problems. Remember that there is no inheritance tax in case of an investment in Mauritius. However, as of August 2015, the law of the deceased’s country of residence governs European successions. In fact, the buyer who does not live more than 6 months on the island is subject to the law of his country (if he lives in Europe). Elsewhere, Mauritian law prevails.

Understanding taxation

Another key element that needs to be understood is the taxation of the country where you want to invest. How will things go if you earn income by leasing your property? What about the added value in case of resale of the property? For French persons wishing to buy property in Mauritius, the country has signed a tax treaty with France, so property income is only taxed (up to 15 %) in the country where the property is located.

Financing

The purchase of real estate often includes a request for a bank loan. If you want to purchase a property in Mauritius as a foreigner, and you do not have the full amount of the sale price, you can approach the local banks. When an agreement is reached, banks lend about 40% of the cost of the real estate investment. However, as a non-resident, you will need to have a relatively high income and a credible financial guarantee. In addition, a local bank account will be required for practical reasons.