HEALTHPLAN MAGAZINE

Spain is witnessing a remarkable surge in the number of Americans seeking longer stays in the country, whether as digital nomads working remotely or individuals embarking on a new chapter in retirement. Recent data from the General Council of Notaries in Spain reveals a substantial 88 percent increase in home sales to Americans during the first half of 2019 to the first half of 2022. Additionally, the number of Americans living in Spain experienced a significant 13 percent growth from 2019 to 2021.

Among expat groups purchasing properties in Spain, Americans rank second in terms of spending, trailing only the Danes. According to the General Council of Notaries report, Americans paid an average price of up to 2,837 euros, or 3,119 USD, per square metre, demonstrating their willingness to invest in the Spanish real estate market. Furthermore, the report highlights that Americans accounted for the highest growth in home prices during the same period.

The rising interest in Spain as a desirable destination can be attributed to multiple factors. The capital city of Madrid, with its abundance of employment opportunities and amenities, has become a focal point for American buyers. Meanwhile, the southern coastal region of Andalusia has long been a popular choice for Americans, and now the city of Valencia, situated on the Mediterranean coast, is gaining traction due to its attractive urban lifestyle and a thriving expat community.

Purchasing or residing in a home abroad involves careful consideration of financial and tax implications. Americans looking to establish themselves in Spain must navigate the country's unique tax system, which differs significantly from that of the United States. Stamp duty, or "AJD" in Spanish parlance, is the primary method of property tax payment in Spain, with rates ranging from 1 percent to 2.5 percent. Additionally, value-added tax applies to new constructions, while transfer tax applies to pre-owned homes. These upfront costs often exceed those typically incurred by Americans in their home country.

Alex Ingrim, a Florence-based private wealth manager and senior investment analyst at Chase Buchanan, stresses the importance of seeking early assistance from local estate agents and property lawyers to navigate the complexities of the Spanish tax system. Individuals considering a move to Spain for retirement or remote work should carefully evaluate the financial and tax implications and seek guidance from advisors well-versed in international tax matters.

Tax considerations for Americans in Spain involve understanding the implications of dual tax systems. While American citizens working in Spain may face higher tax rates, these taxes can be deducted when filing federal tax returns in the United States. Conversely, the United States taxes global income, meaning that income from rental properties or other sources worldwide may be subject to U.S. taxation. It is crucial for individuals to understand their potential liabilities and ensure compliance with both tax systems.

Moving abroad does not exempt individuals from their U.S. financial obligations. It is essential to have a plan in place for managing ongoing debts and payments. Maintaining an American bank account tied to a U.S. address allows for seamless bill payments through automatic transfers, reducing exchange rate fees and wire charges. Opening a Spanish bank account for daily expenses in euros helps individuals avoid the volatility of exchange rates. Finding a Spanish bank that complies with U.S. bank reporting rules ensures proper financial reporting when required.

Spain has introduced various visa options to accommodate the growing number of foreigners seeking to reside in the country. The digital nomad visa, introduced earlier this year, simplifies the process for international teleworkers to move and work in Spain. The golden visa, obtained through the purchase of a property exceeding 500,000 euros, provides individuals with the right to live, work, and enjoy expanded rights in Spain. Non Lucrative visas are also available for retirees and individuals without employment but with passive income. Prospective buyers should consult Spanish immigration lawyers to determine eligibility and visa requirements.

Experts recommend considering renting before committing to a property purchase in Spain. This approach allows individuals to assess the suitability of the location, taking into account personal preferences and needs. Some Americans residing in other countries, such as Portugal, express concerns about the impact of programs like the golden visa on local housing markets. As a precaution, many prospective buyers opt to rent initially to avoid inadvertently contributing to such concerns.

The growing number of Americans choosing Spain as a destination for extended stays and retirement highlights the country's appeal, ranging from vibrant urban centres to picturesque coastal regions. By carefully navigating financial and tax considerations, understanding visa options, and conducting thorough research, Americans can make informed decisions when embarking on their Spanish adventure.

Source

https://www.cnbc.com/2023/07/17/more-americans-are-moving-to-spain-paying-high-prices-for-real-estate.html