When you move to another country, you become a foreign national, subject to legal regulations for non-citizens. There are U.S. tax ramifications, as well – and that's before you factor in all the other issues that arise when you live abroad. Whether you want to retire across the border or across the ocean, here are steps you can take to ensure a smooth transition with the fewest possible unpleasant surprises.
1. Check Visa and Residency Requirements
Immigration and residency laws vary from country to country. You can review the Department of State’s country specific information to find out if you’ll need a visa to enter and reside in the country to which you’re hoping to move. Other useful information is listed on the website as well, including passport validity, recommended and required vaccinations, and currency restrictions for entry and exit.
2. Research Safety and Political Stability
The U.S. State Department website provides up-to-date information about how safe and stable various countries are. At times, there will be travel warnings and alerts about specific locations – or, rarely, the U.S. may restrict citizens from traveling to or within certain countries. The information is updated regularly, as needed.
As a foreign national, you may encounter travel restrictions in certain countries. Remember that while in a foreign country, you are subject to its laws.
3. Determine Rules of Foreign Ownership
Many countries have rules and regulations as to who is permitted to own property, and how the property can be used (some countries restrict foreign ownership altogether). Before you decide on moving to a country, investigate its restrictions in detail and make sure they work with your finances and plans. Your best information source is a local real estate agent. You can find such agents through the International Consortium of Real Estate Associations (ICREA).
Even if a country does not restrict who buys real estate, it may control what happens when non-citizens sell property. Foreigners are permitted to buy property in Malaysia, for example, but if the property is sold, the proceeds have to be kept in a Malaysian bank account.
Also, be sure that your property rights are protected. In the U.S., homebuyers generally receive a clear title to property when they buy it. Rules may be less clear in other countries. Be sure you hire a qualified real estate agent and local attorney to ensure that you know what you've bought, and that all paperwork is handled according to local requirements.
4. Visit Before Moving, Rent Before Buying
Living in a country is very different from being a tourist. Try to stay in neighborhoods and areas you are considering to see what it's like to live as a local. And visit in more than one season. In fact, try to visit once during the least pleasant weather your prospective home endures – hot, dry desert winds; monsoon rains; dreary winter days when there's no sun for weeks. You won't always be able to escape once you're actually living there. Also, see whether there is a local American or international association or club you can join to learn more about living in that country or region.
Once you move, start the transition by renting first to make sure the locale is compatible with your vision for retirement. If it works out, let the house hunting begin. Otherwise, it’s time to research a different area. You may decide you want a more rural setting than you'd originally planned – or that a more urban one does a better job of meeting your needs.
5. Consider an All-Cash Purchase
Locating a U.S.-based bank or other lender that will fund a mortgage for overseas property is exceedingly difficult. Some local banks abroad do make loans to foreigners, but you could be asked for a massive down payment.
Try to find a property you can afford to buy outright, for cash. You'll have more negotiating power, a less complicated transaction and, in many cases, you may end up with a better deal.
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