As More American Expats Prefer Spain, Here are Factors to be Kept in Mind Before Making the Move
As digital nomads with more freedom or retirees seek to explore new horizons, Spain has emerged as a popular destination for Americans making the move. A recent report from the General Council of Notaries in Spain shows that the American population in Spain increased by 13% between 2019 and 2021. Home sales to Americans also surged by 88% during the first half of 2022 compared to the same period in 2019. As per CNBC, Americans paid the second-highest prices, after the Danes, among expats buying property in Spain, at an average of $3,119 per square meter.
Madrid offering job opportunities and the coastal city of Valencia for its large expat company, are particularly attractive to American buyers. However, Americans considering a move to Spain need to take several factors into consideration.
Different tax implications for property ownership
Unlike annual property tax payments in the United States most taxes on property purchases in Spain are paid upfront as a stamp duty or "AJD." The stamp duty can range from 1% to 2.5%, and additional taxes may apply depending on whether the property is a new construction or a pre-owned home. It's advisableto consult with local estate agents and property lawyers early on to understand the purchasing costs and process.
Financial and tax implications for retirees
Retirees considering a move to Spain should seek advice from a financial advisor to navigate the complexities of taxes in both Spain and the United States to avoid double taxation. While an American citizen working in Spain may face a higher tax rate, those taxes can be deducted when filing a federal tax return in the US. On the other hand, the US. taxes global income, so any income earned from rental properties or other sources in Spain will be taxed in the US.
Managing U.S. debts and maintaining credit history
Moving abroad doesn't absolve individuals of their debts in the U.S. It's essential to have a plan in place to handle American liabilities while living abroad. Some countries may require a credit report from the home country when applying for a mortgage or establishing credit. Keeping up with debt payments and maintaining a good credit history in the US can positively impact arrangements in the new country of residence. It's advisable to maintain an American bank account tied to a US address for bill payments and minimizing exchange rate fees.
Visa options for moving to Spain
Among visa options for expats, Spain offers a digital nomad visa designed for international teleworkers, which simplifies the process of moving and working in Spain. Requirements for digital nomad visa applicants include a minimum of three years of professional experience. There's also the golden visa, which grants residency to those who purchase property worth over $539,531. Non-lucrative visas are suitable for retirees or individuals with a passive income who wish to live in Spain without working. Engaging with a Spanish immigration lawyer is recommended to determine visa eligibility and requirements.
Consider renting before buying
Before spending money on purchasing a property, it's advisable to consider renting first to assess whether the area meets your needs. Some Americans already living in other countries, are mindful of how arrangements like the golden visa can contribute to housing issues for locals. A rising influx of foreigners can drive up real estate prices, which makes property purchases out of reach for locals. Renting initially allows prospective buyers to evaluate the area and community before making a long-term commitment.
