How to buy a vacation home abroad

Alexis Konovodoff

Buying a vacation home is a smart way to spend time abroad in your own space. You can make money from tourist rental income or avoid expensive hotel bills when you travel.

We’ve put together everything you need to know about how to buy a vacation home overseas, including budgeting, taxes, and the top locations for US buyers.

We'll also introduce Wise — your international money transfer alternative. Use Wise to send stress-free transfers to over 140 countries - all at the standard mid-market exchange rate.

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Table of contents

What’s considered a vacation home?

A vacation home is a secondary property intended for recreational or occasional use. Unlike your primary residence, where you’ll live for the majority of the year, you’ll typically only use your vacation home for a few weeks every year.¹

Popular vacation homes may include:

  • luxury villas
  • cottages
  • condos
  • ski chalets

Many Americans purchase timeshares or vacation homes in locations like Europe, Canada, and South America. You can save on hotel bills and even rent out your property when you’re not using it.

What to consider before buying a vacation home

Before buying a vacation home, there are a few things to consider. Let’s take a look.

Location

Where do you want to buy your second home? This is one of the most important questions to ask yourself.

Consider nearby attractions, available amenities, and whether you want a beach, lake, rural, or urban vacation spot.

Do you want to rent out your property? Choose a popular tourist destination to earn regular income from your vacation home. This can also ensure it’s easy to sell your property when the time comes.

Budget

It’s important to consider your budget. As well as the property price itself, make sure to factor in property taxes, fees, and maintenance costs.

Even when you’re not living in your second home, you’ll need to cover costs like bills, insurance, cleaning, and security.

If you want to rent out your home, consider the return on investment (ROI) for your property, as you’ll need a good, consistent rental income.

If you can’t buy your vacation home in cash, you’ll also need to check if you can get financing in your country of choice.² You may be able to get an international mortgage from some US providers, so do your research.

💡 Researching mortgage options? Read more:

Rental opportunities

One of the best things about owning a vacation home is rental income! You can make regular money from tourists while you’re not living in your holiday home.

You’ll need to look into local regulations to ensure you meet any rental requirements for your property. You’ll also need to consider the market conditions and who will want to rent in your location.

Taxes and fees

Before buying a second home, look into any taxes or fees for your purchase. As with any property, you’ll pay real estate commission and legal fees for your home.

If you rent out your home for more than 14 days of the year, you’ll pay tax on any rental income to the US Internal Revenue Service (IRS).²

You may also pay country-specific taxes. Some places are more favorable to foreign buyers than others.

You’ll also need to consider exchange rate charges. If you pay for your deposit or property fees in a foreign currency, for example, your US bank will likely add a charge to the transaction.

Buying property abroad? Send money the hassle-free way with Wise

Now that we covered some of the basics, the only question left is: how to send money to pay for your property overseas?

Wise offers you a quick, secure and transparent way of sending money abroad. You get the mid-market exchange rate for your payments and see how much is charged for the transfer before sending the money from your bank.

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How to buy a vacation home: step-by-step

Buying a vacation home is a great way to ensure you always have a comfortable place to stay overseas — and you can rent out your property to tourists when you’re not there.

Let’s take a look at how to buy a vacation home abroad: your step-by-step guide.

1. Find your dream home

Firstly, you need to find the right property for you. You need to work out your needs and goals before looking for your second home:

  • Do you want to rent out to tourists?
  • Do you need a family-friendly location?
  • What is your favourite vacation spot?

Consult a local or international real estate agent who can help you find the best properties for your needs. You can also browse online or ask local communities for their recommendations.

2. Get financing and complete your purchase

Next, you’ll need to get financing and complete your purchase. Make sure to consult a real estate agent, a lawyer, and a mortgage broker to advise you.

Many lenders offer mortgages for foreign buyers, or you can access an international mortgage from some banks in the US.

The purchase process will be different in every country, so do your research beforehand. For example, in Italy, you’re required to sign your papers in front of a notary.³

Once both you and the seller have signed all the appropriate documentation, the property officially belongs to you.²

3. Advertise to renters

Finally, if you want to rent out your property, you’ll need to find tenants. You may already know of tourists in need of short-term accommodation, but it’s a good idea to list your property online, too.

Popular sites include Vrbo®, Airbnb®, and Booking.com®. By advertising your vacation home online, you can expand your reach. However, you may pay a small commission on any bookings.

Make sure to include any pertinent information about your property, and always verify renters before going ahead with an agreement.²

Top choices for vacation homes abroad

So, where should you buy a vacation home? Let’s take a look at the 5 best places to buy a second home, including locations across the globe.

Mexico

Mexico is one of the most popular places to buy a vacation home. The country has an affordable cost of living and a vibrant lifestyle for vacationers heading abroad.

Mexico isn’t far from the US, which means you can easily hop on a plane for multiple holidays every year.

However, you’ll need to do your research before purchasing property in Mexico. You’ll also need to consider the country’s non-resident buyer regulations.⁴

Italy

Italy is a beautiful place to buy your second home. You could purchase property like a luxurious Italian villa in Florence or an urban apartment in Rome.

The country is known for its relaxed lifestyle and delicious food — and it’s easy to travel to other European locations from Italy. This means you can check out lots of different spots every time you visit.

Canada

Canada is a popular destination for American buyers, with cities like Vancouver, Toronto, and Montreal attracting tourists and property investors.⁵

This is due to the country’s proximity to the US and its thriving tourism industry.⁶ It also has some gorgeous natural spots for vacationers to enjoy.

Portugal

Portugal is one of the best countries to buy a vacation home abroad. It has a stable real estate market for investors, with rental opportunities and affordable properties for sale.

If you buy a second home in one of Portugal’s thriving cities, like Lisbon or Madeira, you could make a successful rental income from tourists year-round.⁷

Costa Rica

Costa Rica is fast becoming one of the best places to buy a vacation home. US buyers are purchasing holiday homes in cities like Tamarindo, Santa Ana, and San Rafael.

The country is known for its warm climate and stunning beaches. However, prices are increasing as more Americans choose to invest in Costa Rican property.⁵

Tips to maintain your vacation home

You won’t live in your second home for most of the year, so it’s important to effectively maintain it from afar. Let’s take a look at some top tips.

Get insurance

If you want to buy property abroad as an American, it’s important to get the right insurance.

You’ll need to take out a separate home insurance policy for your second home — and the coverage you need will depend on your location and property type.

For example, if you own a vacation home in a country prone to earthquakes, you may need to take out earthquake insurance.

Speak to an insurance specialist in your country of choice to confirm that your policy covers all eventualities.⁸

Cleaning and security

Get into the habit of regularly cleaning your home, especially between renters. You should also check in with your tenants to ensure they keep your property clean and tidy during their stay.

It’s likely your vacation home will be far away from your primary residence, so make sure to invest in good security, too.

This includes locks, alarms, and smart cameras that let you keep an eye on your house, even when you’re back in the US.

Hire a property manager

You may want to set up property management for your second home. A property manager can oversee your home while you’re in the US.

Instead of managing issues like security yourself, a property management company will maintain your home’s condition and value year-round.²

Buying a vacation home: FAQs


Is a vacation home a tax write-off?

You may be able to deduct up to 10,000 USD for state and local taxes. This applies to the property taxes you pay on both your primary property and second home — and it may differ depending on your situation.⁹

You can rent out your second home tax-free for up to 14 days per year. If you want to rent it out for longer than that, you’ll pay tax on any rental income you earn. Reach out to a tax specialist for more information.

What is the rule of thumb for buying a vacation home?

Many sources recommend allocating no more than 28% of your gross monthly income toward buying a vacation home.

You need to make sure you have enough money to cover your expenses, all without drawing funds away from your principal home.¹⁰

Is it harder to get a mortgage for a vacation home?

You may find it harder to get a mortgage for your vacation home, as many lenders will require a stronger credit score and debt-to-income ratio.¹¹

Second home mortgages may also come with a higher rate of interest¹ — and you may need to pay a down payment of at least 10% for your property.¹¹


A vacation home is a fun way to see the sights and create new memories abroad. You can rent out your home to tourists year-round, but you’ll need to consider any property fees for your second home.

You’ll also need to think about exchange rate costs. Many US banks will add a markup for foreign currency payments — and these charges can all add up.

To start sending low-fee transfers across the world, check out Wise.

Sources

Sources

  1. 1. Investopedia - Vacation home: meaning, overview, special considerations
  2. Investopedia - Vacation home: meaning, overview, special considerations
Sources checked 04/24/2025


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This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

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