Rise in Americans heading to Spain for its real estate opportunities, as many are now choosing to retire in the country.
The Statistics
According to a report, from the beginning of 2019 to the first months of 2021, home sales in Spain to Americans leaped a whopping 88%. Forking out up to 2,837€ per square meter, Americans are only second to the Danes for paying the most among expat groups. The Americans may have an eye for property, as according to the report, the properties that saw the most growth during the 2019 to 2021 period were purchased by Americans. The Spanish Government reports that during this time, the number of Americans residing in Spain went up by 13%.
Madrid seems to be one of the most favourable destinations for Americans, as with moving to any country, cities tend to offer job opportunities and amenities that can bring people to the area. The south of Spain, in Andalusia, is always popular for tourists. Other places in Spain such as Valencia also have a lot of interest as the location offers urban living while remaining close to the beach. Valencia has a lot of expats too, many of whom are from America.
Americans who are seeking adventure, remote work or looking to retire in Spain should keep some factors in mind when searching for their new lives in Spain.
European Taxes
Property taxes in Europe differ from those in the United States. In the US you can expect to pay property taxes annually whereas in Spain those taxes are paid upon purchase of the property. The stamp duty can vary between 1% to 2.5%. In addition to this, there is also transfer tax on pre-loved homes or value added tax on new builds. This equates to the taxes being considerably more than over in the US. It is best to get in contact with property lawyers and real estate experts early on in the property buying process so that everything is crystal clear.
It will also be necessary to ensure your taxes are all in line to make sure there are no hiccups with being taxed on the same income multiple times. And it will be a case of following the different streams of income and assets to see whether the taxes go to Spain or the US first.
For example, if an American is working in Spain, then their tax rate will be higher but then when filing their federal tax return in the US, those taxes become deductions. However, as the United States tax your global income they may be more than happy to tax your income in Spain. It is worth noting that although you may find yourself liable to both systems, it is quite rare that you will be forced to pay tax on the same asset or income twice.
Liabilities From the US
If you have any financial liabilities back in the US, it is important to realise that they will not disappear just by moving country. And that some countries such as Portugal may ask to see a credit check from your home country to ensure that you will be able to keep up with mortgage payments. So, it is necessary to keep up to date on student loans, mortgages, or anything else that could affect your credit history in the States as it could have an impact on you moving forward in a new country. It may be worth keeping your bank account open in the US to save on exchange rates and transfer fees.
As well as your bank account in the States you will also need to open one in Spain for your day-to-day expenses. Take some time to choose who to bank with, as the US Government implements bank reporting rules on every bank that does business with citizens from the US. The bank you go with will need to comply with this so that the reporting can be done efficiently.
Qualifying for Visas
Earlier this year, Spain made it easier for foreigners to work in and move to the country by releasing its digital nomad visa. Suited to “international teleworkers,” applicants have some requirements to meet such as professional experience of a certain amount of time. This visa has now created a much clearer regime.
Some may look towards the golden visa that will allow you to live, work and give you more rights once you are residing in Spain. However, to obtain this you need to purchase a property for over 500,000 euros.
Those who can reply on passive income, such as retirees, can opt for a nonlucrative visa. This means you would be able to live in Spain but not work there too.
Before you Buy
It may be handy to spend some time renting or visiting various areas to see if they meet your preferences before a purchase is set in stone. For those going with the Golden Visa it is worth taking into consideration the fact that other countries such as Portugal have abandoned the scheme, leaving some wondering how this will affect those already living in the country on such visa. Those looking for help regarding their taxes and visa options in Spain should get in touch with Private Client Consultancy.
Spain has countless desirable areas to choose from that offer completely different varieties of lifestyle. It is best to scout around and seek advice from your real estate agent before committing to an area. Contact PCC Property today to find the right property for you.
