A real estate agency window in Alicante, Spain.
More and more Americans are choosing to live in Spain for longer periods of time, whether as digital nomads or retirees seeking a new life. According to a report by the General Council of Notaries in Spain, the number of Americans living in Spain grew by 13% from 2019 to 2021, and home sales to Americans increased by 88% from the first half of 2019 to the first half of 2022. Among expats buying property in Spain, Americans paid the second highest prices, after the Danes, with an average of €2,837 or $3,119 per square meter. Additionally, Americans were responsible for the highest growth in home prices during the same period.
When it comes to choosing a location, American buyers are particularly interested in urban areas like Madrid, thanks to its job opportunities and amenities. However, the city of Valencia on the northern Mediterranean coast is also gaining popularity among American expats due to its large expat community and beautiful coastal location.
Purchasing or living in a home abroad requires a certain level of financial resources, as there are costs associated with both real estate and travel. It’s important to consider the different tax implications when buying property in Spain. Unlike the US, most taxes on property in Spain are paid up front, such as stamp duty and value-added tax. It’s crucial to work with local estate agents and property lawyers to understand the purchasing process and requirements.
Retiring or working remotely in Spain also has financial and tax implications. It’s important to seek advice from a financial advisor to understand the tax implications in both Spain and the US. While an American working in Spain may have a higher tax rate, those taxes can be deducted when filing a US federal tax return. On the other hand, the US taxes your global income, so any income earned from rental properties in Spain will be taxed by the US.
Before making the move, it’s crucial to consider any existing debts or liabilities in the US. These debts will still need to be dealt with even when living abroad. Some countries may ask for a credit report from your home country when applying for a mortgage or establishing credit, so it’s important to keep up with your payments and maintain your US credit history. It’s also recommended to keep an American bank account tied to a US address to easily pay bills and avoid exchange rate fees. However, it’s also important to have a Spanish bank account for daily expenses and comply with US bank reporting rules.
Depending on your situation, there are different visa options available for living and working in Spain. The recently launched digital nomad visa allows foreigners to move to Spain and work remotely. The golden visa, on the other hand, is obtained when purchasing a property for more than €500,000 and provides additional rights and benefits for residents. Nonlucrative visas are meant for retirees or those with a passive income, allowing them to live in Spain without working.
Before purchasing a property, it’s advisable to rent first to see if the area suits your preferences and needs. Some Americans are mindful of the potential impact of arrangements like the golden visa on local housing problems and choose to rent initially to avoid contributing to these issues.
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