Have you been contemplating purchasing a vacation home or pied-á-terre in a warm and sunny climate within or even outside the U.S.? Maybe something offshore and exotic in Costa Rica, Belize, Panama, Nicaragua, San Salvador, Guatemala, the new hotspots in the Southern Hemisphere? Maybe Mexico, too?
The dollar has been and is still very strong at the current time in most of these and other localities. According to an article written by Kate Dore for CNBC, personal finance, on May 18, nearly one in four American expatriates say they are very serious or possibly contemplating to drop their U.S. citizenship, Greenback Expat Tax Services found in a survey of 3,100 American expats in 125 countries from April 15, 2021 through May 10.” The State Department counts 9 million expatriates living outside U.S. The Greenback survey said more than four in 10 ex-pats would renounce their citizenship due to the burden of filing U.S. taxes.
(Here is a link for more pertinent information on where everyone is relocating to: https://www.worldatlas.com/articles/countries-with-the-most-american-emigrants.html)
Obviously, when one is finally thinking about cashing in for all those years and spending one’s hard-earned money in being proactive and keeping up and maintaining their home, the question is where do we move? Many would thoroughly enjoy staying around or moving closer to their children and grandchildren, which from my current personal perspective and experience, there is nothing like it in that phase of your life to be around your entire family. It really completes the pie of life for all the enjoyment and fun that you have earned and yearned for.
Unfortunately, not everyone has that option and must make other plans. If you are going to consider moving out of the U.S. as many are considering or have done, you must research your possible destinations. The realization of the immensity of the kind of project that it will evolve into makes for life-changing decisions since this can become a permanent move. How far will your money go as many of us are living much longer than past generations?
Statista Research Dept. published an article on Jan. 20, 2021, noting that in 2016 there were 82,000 centenarians (100 years or older). It said that number will increase to 589,000 by 2060. Housing is a very critical and important issue, but isn’t the only crucial variable. Food and especially potable clean drinking water will also go hand-in-hand with living a quality and healthy lifestyle and/or retirement. I would certainly look into the new destination’s infrastructure and most importantly the quality of the water supply right now and what if any plans have they adopted and instituted to make improvements going into the future? This will be a major component of living as well as a basic survival and staple of life.
Our water in the United States may not be perfect by any stretch of the imagination, but relocating to another country can be even more perilous and fraught with potential life issues near term and long term. I can’t imagine that anyone would just move without gaining sufficient knowledge of the country and territory that they would be moving to. But then again, gaining as much information as possible to protect your living standards and finances is critical. Finding an affordable country and location will also be of tremendous value.
As we are living longer, one wants to make sure that our money holds out and that our investments are such that we can continue to enjoy our lives when relocating for a job or position and/or retirement. Will you be earning enough to pay the rent and/or mortgage in another country? Will you be able to borrow as a U.S. citizen? Assuming you can even borrow any money in a foreign destination, which often is not possible.
What will the interest rates be as a foreign national or expatriate as they usually are much higher with a 30-40 percent down payment? You could borrow against your U.S. real estate or take a line of credit to alleviate trying to borrow in another offshore destination. There is a very informative article in Investopedia.com from Jan. 1, 2021, by Jean Folger about “How to Finance Foreign Real Estate and if you are considering moving abroad, it’s an excellent source that will keep you on the straight and narrow.
What are the rules as an expatriate or foreign national with owning property? I have conversed in length with many expatriates from the U.S. and Canada and for the most part, they are incredibly happy with their new domiciles abroad and never have to pick up a snow shovel again. However, when they do get a visit from their family or go visit their children and grandchildren it’s a top 10 event. So proceed with caution and be prudent and smart in your decision-making when considering a move out of the U.S.
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has 40 years of experience in the Real Estate industry and has earned designations as a Graduate of the Realtor Institute (G.R.I.) and also as a Certified International Property Specialist (C.I.P.S). For a “FREE” 15 minute consultation, a value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: [email protected] Just email or snail mail (regular mail) him with your ideas or suggestions on future columns with your name, email and cell number and he will call or email you back.