Rosalind Evans
An increasing number of Americans are opting to relocate to Spain, whether as digital nomads or retirees, and they are showing a strong willingness to invest in high-priced real estate. A report by the General Council of Notaries in Spain reveals that the American population in Spain grew by 13% between 2019 and 2021. Additionally, home sales to Americans experienced a remarkable surge of 88% from the first half of 2019 to the first half of 2022.
Among expat groups purchasing properties in Spain, Americans were the second highest spenders, after the Danes, with prices reaching up to 2,837 euros or $3,119 per square meter. American buyers also contributed to the highest growth in home prices during the same period.
When considering purchasing or living in a home abroad, it is important to have a certain level of wealth due to the costs associated with real estate and overseas travel. Property taxes in Spain differ from those in the United States, with most tax on property paid upfront in a stamp duty rather than through annual property tax payments. The stamp duty can range from 1% to 2.5%, and there may also be value-added tax or transfer tax depending on the type of property.
Urban areas such as Madrid, known for its abundant job prospects and amenities, have garnered significant interest from American buyers. The southern coastal region of Andalusia has also emerged as a sought-after location. Meanwhile, the city of Valencia, renowned for its thriving expat community, is gaining increasing popularity through positive word-of-mouth recommendations.
When considering a move to Spain for retirement or remote work, it is crucial to understand the financial and tax implications. Seek advice from an advisor to navigate the complexities of international taxes and ensure compliance with both Spanish and U.S. tax regulations. While American citizens working in Spain may face higher tax rates, taxes paid in Spain can be deducted when filing federal tax returns in the U.S. On the other hand, the U.S. taxes global income, including income from rental properties in Spain.
When relocating abroad, it is crucial not to disregard debts in the U.S. as they do not vanish automatically. Effectively managing American liabilities while residing overseas requires careful planning. Certain countries, like Portugal, may even demand a credit report from the individual’s home country as part of the mortgage or credit application process. Maintaining an American bank account linked to a U.S. address can facilitate bill payments and provide advantages in terms of exchange rates.
Spain offers different types of visas that may be applicable depending on the individual’s circumstances. The digital nomad visa, introduced recently, allows easier relocation and work opportunities for international teleworkers. The golden visa is available to those who purchase properties above a certain price threshold and offers additional rights and benefits. Nonlucrative visas are suitable for retirees and individuals with passive income, allowing residence in Spain without permission to work.
Before committing to purchasing a property, it is advisable to rent first to ensure the chosen area meets personal preferences and needs. Some Americans living in other countries, such as Portugal, are cautious about contributing to housing problems for locals through arrangements like the golden visa. As a result, many potential buyers choose to rent initially to avoid such concerns.
In summary, the number of Americans moving to Spain has been steadily increasing, and they are willing to pay high prices for real estate in popular areas. Understanding the tax implications, managing debts, and exploring visa options are essential steps for those considering a move to Spain. Renting before buying can provide a better understanding of the chosen location.
