Buying a home abroad makes sense if you will use it often, can afford 10% to 15% in buying costs and the yearly running costs, and accept the extra tax, legal and currency complexity. It rarely makes sense if you only want rental income and have not tested the yield, or if you may need the money back soon. In the illustration below, a home bought for €250,000 costs about €12,400 a year to own, counting running costs and the return you give up on the money tied up, against €7,200 to rent a similar place for 6 weeks, so the home must give you more than a holiday to justify itself. This guide sets out the pros and cons, the hidden costs, a worked comparison and a checklist so that you can decide before you spend money. It is general information, not financial advice.
What are the main advantages?
- Use and lifestyle. A home you can use at any time, without booking and with your own things.
- A base for a move. A place to test life in another country before you commit to residency.
- Possible rental income if the rules allow it and the demand is real; see how to calculate rental yield.
- Diversification. Property in another country and currency can spread your risk, although it also adds new ones.
- Prices. Some markets are cheaper than at home, as in the cheapest places to buy property in Europe.
What are the main disadvantages?
- High transaction costs. Spain’s total buying costs are 10% to 15% and Portugal’s 7% to 10% in one guide, so you need a gain just to break even.
- Tied-up money. A home is not easy to sell quickly, and a sale has its own taxes; see selling in Spain and selling in Portugal.
- Tax in two countries. You may pay tax on rent or gains abroad and report them at home.
- Distance. Repairs, tenants and bills are harder to manage from afar; see choosing a property manager.
- Policy risk. Rules on holiday lets, visas and taxes change; see Spain’s proposed tax.
- Currency risk. Exchange-rate moves can change the cost and the return.
Which hidden costs do people miss?
A currency provider’s guide lists these categories: legal and notary fees; taxes and duties, including stamp duty, registration or transfer taxes, with higher rates for foreigners in some countries; currency and transfer costs, because exchange-rate swings can change the price substantially and banks often charge high fees; maintenance and repairs, which are harder to arrange in remote areas; property management fees and the cost of checks even when the home is empty; insurance premiums that depend on the location and the risk of natural disasters; financing, since mortgages for foreign property can carry higher interest rates and larger deposits; utilities and connection fees, especially in rural areas; administrative hurdles such as learning local law and zoning rules; market risk and policy changes; travel to oversee the property; and renovation costs when a survey finds structural, electrical or plumbing problems. The guide gives no percentages, so use the country guides for numbers: Spain buying costs, Portugal taxes and running costs.
A worked comparison: own or rent holiday stays?
As an illustration, suppose you buy a home for €250,000, pay buying costs of 12% (€30,000), and spend €4,000 a year on taxes, fees, insurance, utilities and repairs. The €280,000 you invest could earn something elsewhere; assume 3% a year, which is €8,400. Your yearly cost of owning is then €12,400 (≈ £10,500 / $13,900), not counting any change in the value of the home. Renting a similar holiday home for 6 weeks at €1,200 a week costs €7,200. In this example you would need to use the home for about 11 weeks a year before it costs less than renting, or earn rent from it.
Conversions are approximate and use the European Central Bank reference rates of 14 October 2026 (€1 = £0.844 = $1.120). Rates move every day.
The assumptions are mine and are only an illustration; change them to your numbers. If the home rises in value, the result improves; if it falls, or you sell with 3% retained and capital gains tax, it worsens. See the Spain costs guide for the real buying costs.
Who should not buy?
- Someone who may need the money within a few years.
- Someone who plans to use the home only a couple of weeks a year and has no plan to let it.
- Someone who cannot afford the buying costs and the running costs from income.
- Someone who is buying under pressure, from a sales trip or an offer that expires; see how to avoid property scams.
How do you decide?
- Rent in the area for a season first, and note what you spend.
- Write down the full cost: buying costs, yearly costs, travel and furnishing.
- Test the rental case with a cautious occupancy; see the yield guide.
- Ask advisers in both countries about tax on rent, sale, inheritance and reporting.
- Compare two countries using the best countries guide.
- Decide the maximum you will spend, and stick to it.
- If you proceed, follow the Spain or Portugal buying guide.
What are the common mistakes?
- Buying on holiday, in a rush and in summer.
- Not counting the buying and selling costs in the return.
- Assuming rental income will cover the costs.
- Forgetting inheritance and estate rules in two countries.
- Ignoring the currency effect on the mortgage or the rent.
- Skipping independent legal advice.
What are the alternatives to buying?
- Rent for a season in the area you like and keep the cash invested at home.
- Rent long term and decide after a year; in Spain, see the cost of living guide for what rent and living cost.
- Buy a smaller or cheaper home with lower running costs, perhaps with the help of the cost tools on our tools page.
- Share ownership with family if you can agree on the use and the costs, with a written agreement.
How should you think about the exit?
Before you buy, imagine the sale. Who would buy this home, at what price, after how long and with what tax? In Spain the buyer withholds 3% and you file Modelo 210 within four months; in Portugal half of the gain is taxed on a progressive scale and you declare it the next spring; both are explained in the selling guides above. Estate rules in two countries add further complexity if the home is inherited. A clear exit makes the decision to buy easier.
What about family and inheritance?
A foreign home becomes part of your estate, and inheritance rules and taxes depend on the country of the property and sometimes on your residence. Ask a lawyer in the country of the home how it passes to your heirs, whether you need a local will and what taxes they would pay. Include this in your decision, particularly if you are buying with a partner or with children in mind.
What is the bottom line?
Buy abroad when you have a clear use for the home, a budget that survives the costs and a plan for the exit. If any of the three is missing, rent for a season first and decide later.
One last check before you decide
Write down the number you are willing to lose if the home does not rise in value, cannot be let and has to be sold in a hurry. If you are comfortable with that number, buying is a lifestyle decision you can afford; if you are not, wait.
Frequently asked questions
Is buying property abroad a good investment?
It depends on the price, the costs, the rental demand and the taxes. Test the numbers with the yield method and include buying and selling costs.
What are the hidden costs of buying abroad?
Legal fees, taxes, currency and transfer costs, maintenance, management, insurance, financing costs, utilities, travel and renovation.
How much should I budget on top of the price?
One guide gives 10% to 15% in Spain and 7% to 10% in Portugal, Italy and Greece. Use the country calculator for your case.
Is it better to rent holiday homes?
If you would use the home only a few weeks a year, renting can cost less. Compare the yearly cost of owning with the cost of renting the same weeks.
Do I pay tax at home on a foreign property?
Often yes on rent and gains, with credit for foreign tax in many cases. Ask a tax adviser in your home country.
This is general information, not legal or tax advice. Rules and rates change, and your situation may differ. Confirm the figures with the tax authority and a qualified lawyer or tax adviser before you commit. Facts last checked on 16 October 2026.
Sources
Official sources (check these for the current rule):
Also cross-checked against published guides, because practice varies between notaries, registries and banks:
