American expat living in Germany would like to buy a flat in Spain...Advice needed

23 posts in this topic

Hello there,

I need a bit of advice and I'm surprised that I couldn't already find an existing thread about this topic, but, as the title states, I'm an American expat living in Munich with a residence permit, who would like to buy a flat in Valencia, Spain for future retirement.

Is there an expat out there with experience with living in Germany but purchased property in another EU country?

 

Some questions I have are:

Would it be better to get a loan in Germany or Spain?

Would I need to file taxes in Spain if I own a home there? I would assume yes, if it's a rental property and no if I don't rent it out?

I currently don't file income taxes in Germany. I make very little and have no assets or deductions so I was told it wasn't necessary. But if I purchase a flat in Spain, would that mean that I would need to start to file income tax returns in Germany (weather it's rental property or not)?

What are the biggest challenges of making a purchase abroad?

Are there any hidden fees, higher interest rates, etc. as a non-EU citizen when purchasing property in the EU?

 

I'm sure there are some questions that I have not yet thought of but I have never done this before so I'm not 100% sure of what to ask. I'm just starting my research.

 

Any advice would be greatly appreciated.

Many thanks in advance,

Mia

 

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23 minutes ago, Mia.Tchoukour said:

Some questions I have are:

Would it be better to get a loan in Germany or Spain?

..

I currently don't file income taxes in Germany. I make very little and have no assets or deductions so I was told it wasn't necessary.

 


I’m confused. How do you expect to convince either a German or Spanish bank to give you a loan with no income to speak of or other financial assets? 

 

 

 

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My husband knows a couple of people who bought homes in Spain.  I can’t tell you the details, since I don’t know the people myself.  However, what he did tell me was that his colleague hired a Spanish immigration lawyer to help with all of the logistics.  The lawyer was very helpful in all aspects.

 

The guy also had to go back to the States and visit a Spanish consulate office to apply for residency and show that he had sufficient income and health insurance.

 

We also know people who have bought homes in Italy.  One concern that came up was finding a home insurer.

 

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Thank you all for your help so far.

 

@mtbilking - I do have income but I make very little for living/working in Munich. My income for Valencia would be more than enough to have a good life there. Property there is also very cheap compared to Munich or Germany in general. I have established credit in Germany with certain accounts and credit cards so I'm hoping that my income and credit score would be good enough to get a loan for 100,000 EUR which is not much, I'd say.

 

I know this process would be easier if I was a German citizen but I'm not ready to give up my US citizenship just yet. Just looking into the obstacles as a non-EU citizen. 

 

 

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24 minutes ago, Mia.Tchoukour said:

Thank you all for your help so far.

 

@mtbilking - I do have income but I make very little for living/working in Munich. My income for Valencia would be more than enough to have a good life there. Property there is also very cheap compared to Munich or Germany in general. I have established credit in Germany with certain accounts and credit cards so I'm hoping that my income and credit score would be good enough to get a loan for 100,000 EUR which is not much, I'd say.

 

I know this process would be easier if I was a German citizen but I'm not ready to give up my US citizenship just yet. Just looking into the obstacles as a non-EU citizen. 

 

 

"...my income and credit score would be good enough to get a loan for 100,000 EUR which is not much, I'd say."

I was in Valencia two years ago and it was possible then to buy an older apartment in the city for less than €100K, in need of renovation/modernisation but liveable. If you're willing to look outside Valencia proper, you can find lower prices.

 

"I'm not ready to give up my US citizenship just yet."

The new government has indicated changes to the citizenship laws, specifically allowing dual citizenship. This would remove a lot of the hurdles in the way of moving to Spain. This is what I (a Canadian ex-pat in Berlin) am waiting for.

 

Please keep us posted!

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24 minutes ago, Mia.Tchoukour said:

 

I know this process would be easier if I was a German citizen but I'm not ready to give up my US citizenship just yet. Just looking into the obstacles as a non-EU citizen. 

 

 

 slightly off-topic, but maybe interesting in your context....

 

if you're not in a great hurry, you could wait for our soon to be "Ampelkoalition" to deliver on one of their promises - allowing dual citizenship - and acquire German Staatsbürgerschaft while retaining your US-citizenship. If you don't mind be a life-long hostage of IRS, with all the nasty consequences for your investments, then travelling with two passports does have advantages. 

 

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Ah, yes. Thank you, Karin. I did hear that may be a possibility in the future. I may hold off for a year or so in buying a flat in Spain since it may take me some time to look into all that I need to know about the bureaucracy and to save enough for a down payment, taxes, etc.

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I don’t think you should do it. I think you should invest as much as you can on a good, cheap mutual fund or ETF and work on increasing your income beyond subsistence level. In x years buy the property in cash or take a small loan with good conditions. If you’re giving all the facts straight and I remember the tax law correctly  then you’re earning less than €10,000/year in Munich, that’s too little.

 

A rental, specially abroad, always comes loaded with problems, this I can guarantee you from experience. Money solves all issues, but when it’s scarce anything in a rental property can become a nightmare.

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7 minutes ago, MikeMelga said:

Just be careful with "Okupas" (squatters). It's a huge problem in Spain.

 

Just one of many problems you can have with a far away property. TBH, if my father wasn't representing me, I'd get rid of my rental in Lisbon ASAP.

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Unless you have something specific in mind, you could also speak to an internationally active realtor to get their take on the matter. They should have up to date knowledge and if none of their offers fit what you are looking for - oh well... 

 

I think Engels & Völkers used to be quite active in Spain, not sure if that is still the case though. 

 

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Got admonished for continually giving bad advice the other day (hello Jeffo), so please do not regard this as such...

However, based on observation, expect to be taken for a ride on the price. One for the locals, one for foreigners. Also dunno if the law changed but one time of day foreigners could not leave property in Spain in their will to inheritors. Immobile assets reverted to the state... stuff like that can creep out of the woodwork unexpectedly. Do your homework very carefully indeed. Hope you speak the language too.

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1 hour ago, mtbiking said:

 

Just one of many problems you can have with a far away property. TBH, if my father wasn't representing me, I'd get rid of my rental in Lisbon ASAP.

That's why my house in the north of Portugal is not up for renting...

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29 minutes ago, optimista said:

However, based on observation, expect to be taken for a ride on the price. One for the locals, one for foreigners. 

 

I remember reading an article during the height of the Irish property bubble about people buying holiday properties on the Black Sea coast in Bulgaria. The saying was there were three prices: one for locals, one for foreigners and one for the Irish. Prices were so high in Ireland, it skewed people's opinions on what constituted value in Bulgaria.

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IIRC you can get Spanish citizenship if you buy property worth more than a certain threshold. Don´t remember what that threshold is though. Maybe worth investigating?

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4 hours ago, jeba said:

IIRC you can get Spanish citizenship if you buy property worth more than a certain threshold. Don´t remember what that threshold is though. Maybe worth investigating?

I seriously doubt that. I think you get a resident VISA, like in Portugal.

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With a property investment of €500K or more, you're eligible for a Golden Visa (permanent residence), not citizenship.

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