When we bought our first property overseas, in Ireland, we were thinking only about the purchase price and the down payment required, given the financing we believed we'd qualify for. That's how we set our budget as we started our search. We didn't speak with a real estate attorney until after we'd begun looking at houses. Fortunately, we had the conversation before we settled on a specific property.

Transaction costs when buying a piece of real estate in the United States are nominal and related mostly to financing. In Chicago, for example, the buyer pays a transfer tax, but, at 0.75%, it's nominal. Lief doesn't remember it and figures it must have been rolled into the rest of the closing costs and buried in the title company disclosure information.

In Ireland, however, as well as in most of the 25 countries where we've bought real estate, the buyer pays a government transfer tax that isn't nominal. When we bought in Ireland, the transfer tax was 9%. That meant that the money we had available for a down payment was less than we had calculated. We had to back out that unexpected 9%.

At the time we resigned ourselves to the transfer tax by reminding ourselves that Ireland doesn't charge property tax. Hold a property for four or five years, and the total cost of your property would be comparable to your total cost in the United States including property tax. Hold longer, and you came out ahead.

Transfer taxes, charged in many countries, range from 1% to 10%. Governments can use them to help dampen a frothy real estate market. That's why the rate in Ireland was 9% when we bought in 1999. Today, Ireland's transfer tax, or stamp duty, as it is called in commonwealth countries, is 1% up to 1 million euros of value and 2% for any amount over 1 million euros.

A true transfer tax isn't recoverable. However, some countries, including Nicaragua, for example, charge the seller a tax at the time of closing that is sometimes referred to as a transfer tax but that is really a capital gains withholding tax. Although this fee is charged to the seller, he typically passes it on to the buyer. When charged, this fee is a way for the country to make sure it gets paid at least some of the income tax due on the capital gains from the eventual resale of a piece of property. Governments of countries with active foreign property markets understand that most foreign buyers aren't going to file tax returns when selling a real estate holding in that country. The tax charged at the point of sale is meant to bring any eventual tax owed on any eventual capital gain forward. If by some chance the withholding tax is more than what the capital gains tax would be (usually it won't be), you can then file a tax return to try to get a refund of the difference.

Thanks to transfer taxes, buying and flipping for a quick profit is not common in most overseas markets. While you can buy a piece of real estate in the United States with a high loan-to-value (LTV) mortgage, do some work, then turn around and sell the property for, say, a 10% profit on your purchase price that equates to a 100% profit on your 5% down payment after paying the real estate agent, that's not a viable strategy most places overseas. Especially as high LTV financing isn't easy to get as a foreigner.

Another upfront cost to ask about is agent commissions. In most countries, as in the United States and Canada, the list price includes the sales commission, meaning the commission comes out of the seller's end. However, in some countries, including Argentina and Italy, for example, the buyer and the seller split the agent commission. If this is the case in the market where you're buying, you need to factor this additional cost into your budget.

In some markets, the commission isn't included in the listing price but added on top, increasing your purchase price. This can be the case in France, though the strategy is less common today than in the past and must be disclosed in the listing advertisement.

Attorney and notary costs should run 0.5% to 1% of the transaction cost, with the percentage decreasing as the value of the transaction increases. Unfortunately, in some Latin American countries, some attorneys notice how much real estate agents make from property transactions and get the idea that they should make more. The result is that attorney fees in this part of the world can be all over the board. Confirm the fee for a particular transaction with your attorney before you begin to process any paperwork with him. Don't assume that his rates will be comparable to rates quoted you by another attorney.

Note that, unlike a notary in the United States, a notary in a civil law country is a licensed attorney with an additional license (specific for performing the duties of a notary) or title granted by the government. These are semigovernmental agents who act as gatekeepers for official documents, including property titles. In France, for example, your notaire manages the entire real estate purchase process (meaning you don't need a regular attorney; your notaire takes the place of an attorney), including the title check and the transfer of title. In other countries, the notary is simply the official registration agent.

Registration fees should amount to less than 0.5% of the purchase price but are typically charged as a set fee, rather than as a percentage of the purchase price.

Understanding your total closing costs when buying is important to your budget planning. This is another reason to use a real estate attorney. He can help confirm your costs. Your real estate agent should be able to help, too, and, if you're buying in a market where foreign buyers are common, he might have a buyer information sheet to share with you, detailing all costs a buyer is liable for.

Once you've determined your costs on the buy side, detail the costs for when you sell. This will give you the round-trip costs of your purchase.

Whereas the possibility of a transfer tax might give you pause as you research potential overseas investment markets, you'll be glad to hear that sales commission rates in many countries are well below the 5% to 6% standard in the United States and Canada. The real estate agent's fee in Colombia is only 3%. In fact, the upfront closing costs in Colombia are low, as well, making it one of the lowest round-trip cost destinations you'll find. The total cost of buying and then selling in this country is 5.25% to 6.5%.

On the high side is Andorra. While you're not likely to buy an investment property in high-rent Andorra, it's worth noting that the round-trip costs in this country range from 12% to 17.5%. Why such a wide range? Agents charge from 5% to as much 10%, depending on the agency and the price and location of the property.

Other countries where real estate agent fees are notably high include Belize and the Bay Islands of Honduras, where the standard agent's commission is 10%.

Another cost to understand before you buy in any market is the country's capital gains tax. Americans are liable for capital gains tax in the United States on any profits when selling property overseas, but you get a tax credit for whatever capital gains tax is paid in the country where the property is located. If the tax owed is greater in the foreign country than in the United States, you owe nothing on the U.S. side. If the tax owed in the foreign market is lower than the U.S. tax, you pay the difference on the U.S. side. Speak with your U.S. tax preparer for details on how these foreign tax credits work.

Not all countries charge capital gains tax on real estate profits. Rental property owned in New Zealand for five years or more is not liable for capital gains tax. In France, the capital gains tax on real estate is reduced for nonresidents by 6% a year starting with the sixth year of ownership. Own for 22 years or longer, and you owe no capital gains taxes. It's France, though, so that's not the end of the story. You're also liable for a social charge on the gain that is reduced every year after the fifth year of ownership and reaches 0 after 30 years. Sell before five years, and you'll be liable for 19% capital gains tax and 7.5% in social charges.

Of course, Americans owe capital gains taxes in the United States even if no capital gains tax is charged in the foreign country. And remember that things like capital gains tax rates change, as has happened in Colombia since we bought there. When we made our investment, capital gains were taxed at the highest income tax band. The country has since instituted a separate capital gains tax rate of 10%.

We detail the round-trip costs for 20 key markets in Appendix A.