Author Topic: Moving abroad to live that frugal FIRE life in Spain  (Read 22273 times)

Doubleh

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #100 on: February 15, 2020, 04:23:47 PM »
Have you ever considered the canary islands? They are pretty high up on my list of potential future destinations.

Actually no, but iīve only heard good things from other people. Really mixed nature like Mallorca. Even warmer and better prices than Mallorca. For us it was the distance, you can get anywhere in Europe within 4 hours from Mallorca. For the Canary islands you have to add two extra hours to that.

Mr Snow the canaries are very pleasant! If anyone is planing a visit to Gran Canaria send me a PM and Iím happy to meet for a beer. And yes some journeys need an extra flight although there are direct flights to a good few European capitals and several spanish cities. 
« Last Edit: February 15, 2020, 04:26:42 PM by Doubleh »

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #101 on: February 15, 2020, 06:47:11 PM »
Some lively discussion here on wealth tax in Spain and some good points made already. I just wanted to jump in and point out a couple of things that make it less scary than it sounds at first.

Firstly the tax is in bands and only applies to assets above each band - there is a summary here https://www.spanishpropertyinsight.com/tax-and-pensions/spanish-wealth-tax-patrimonio/

So the top rate of 2.5% only apples to assets more than EUR 10.7m per person over the 700k exempt amount. Thatís a pretty fat fire sum to talk about.

If you look at a more likely generous fire example of EUR 2m subject to the wealth tax for a couple, the tax would only be due at 0.2 or 0.3% on the 0.6m of assets above the combined exemption of 1.4m, which would come to a couple of grand a year. For a typical American this could easily be offset by the lower cost of health care you would pay in Spain (eg we pay about EUR 120 per month for comprehensive private health insurance for family of 4)

So itís not like there is a limit at 1.4m and if you go over it a little bit you will pay tax on the whole 1.4 or anything like that.

But the situation is even better than this. My understanding is that investments held in private pensions including a 401k are exempt from wealth tax, which will likely exclude a chunk. IRAs seem like a grey area as Spain doesnít really have an equivalent, but I believe there is an argument can be made that they should also be excluded.

Then if you say own an investment property in USA the wealth tax looks at what you paid for it, rather than the current market price which could make a big difference. And of course you net off any mortgage you have on the property and only pay on the net amount. Plus donít forget the tax doesnít include your property in Spain unless it is over 300k each / 600k for a couple which will go a fair way in most places.

If you factor all of these in, I suspect most people on this forum shouldnít have too much to worry about from the wealth tax.

Thanks for the link. I am in total agreement on the health care thing. The US is gobsmackingly insane about this. Today I pay $24K a year for insurance for a family of 3. Since my son isn't yet of college age, we might have to tolerate the insanity for a while longer.

You should post something about your Gran Canaria life - we're envious!!

Doubleh

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #102 on: February 16, 2020, 02:10:06 AM »
Thanks for the link. I am in total agreement on the health care thing. The US is gobsmackingly insane about this. Today I pay $24K a year for insurance for a family of 3. Since my son isn't yet of college age, we might have to tolerate the insanity for a while longer.

You should post something about your Gran Canaria life - we're envious!!

Re the healthcare I donít want to go down that rabbit hole as I could talk about it all day and donít want to bring politics into a civilised discussion! But I do think itís important to point out the stark difference in costs as I think a lot of Americans are probably put off moving overseas when they see higher taxes without ever considering how much difference the lower cost of healthcare makes.

Thanks for the suggestion about Gran Canaria - I donít really think of it as anything special as itís just the life weíre living now! I donít want to detail Mr Snowís thread but if more people are interested maybe Iíll start a journal or blog. For now Hereís a quick pic of a sunset I took on my phone a couple of weeks ago from the end of our road; the faint peak at the extreme right is mount Teide on Tenerife
« Last Edit: February 16, 2020, 02:18:33 AM by Doubleh »

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #103 on: February 16, 2020, 05:59:28 AM »
Some lively discussion here on wealth tax in Spain and some good points made already. I just wanted to jump in and point out a couple of things that make it less scary than it sounds at first.

Firstly the tax is in bands and only applies to assets above each band - there is a summary here https://www.spanishpropertyinsight.com/tax-and-pensions/spanish-wealth-tax-patrimonio/

So the top rate of 2.5% only apples to assets more than EUR 10.7m per person over the 700k exempt amount. Thatís a pretty fat fire sum to talk about.

If you look at a more likely generous fire example of EUR 2m subject to the wealth tax for a couple, the tax would only be due at 0.2 or 0.3% on the 0.6m of assets above the combined exemption of 1.4m, which would come to a couple of grand a year. For a typical American this could easily be offset by the lower cost of health care you would pay in Spain (eg we pay about EUR 120 per month for comprehensive private health insurance for family of 4)

So itís not like there is a limit at 1.4m and if you go over it a little bit you will pay tax on the whole 1.4 or anything like that.

But the situation is even better than this. My understanding is that investments held in private pensions including a 401k are exempt from wealth tax, which will likely exclude a chunk. IRAs seem like a grey area as Spain doesnít really have an equivalent, but I believe there is an argument can be made that they should also be excluded.

Then if you say own an investment property in USA the wealth tax looks at what you paid for it, rather than the current market price which could make a big difference. And of course you net off any mortgage you have on the property and only pay on the net amount. Plus donít forget the tax doesnít include your property in Spain unless it is over 300k each / 600k for a couple which will go a fair way in most places.

If you factor all of these in, I suspect most people on this forum shouldnít have too much to worry about from the wealth tax.

Awesome post, thanks for clarifying the details on the wealth tax! 🙏

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #104 on: February 16, 2020, 06:04:07 AM »
Thanks for the link. I am in total agreement on the health care thing. The US is gobsmackingly insane about this. Today I pay $24K a year for insurance for a family of 3. Since my son isn't yet of college age, we might have to tolerate the insanity for a while longer.

You should post something about your Gran Canaria life - we're envious!!

Re the healthcare I donít want to go down that rabbit hole as I could talk about it all day and donít want to bring politics into a civilised discussion! But I do think itís important to point out the stark difference in costs as I think a lot of Americans are probably put off moving overseas when they see higher taxes without ever considering how much difference the lower cost of healthcare makes.

Thanks for the suggestion about Gran Canaria - I donít really think of it as anything special as itís just the life weíre living now! I donít want to detail Mr Snowís thread but if more people are interested maybe Iíll start a journal or blog. For now Hereís a quick pic of a sunset I took on my phone a couple of weeks ago from the end of our road; the faint peak at the extreme right is mount Teide on Tenerife
"I donít want to detail Mr Snowís thread..."
Thread subject is "Moving abroad to live that frugal FIRE life in Spain" and as far as I know the Canarias is in Spain, so you are welcome to go all in with blog, posts, journals, etc! 😂

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #105 on: February 16, 2020, 07:45:34 AM »

Thanks for the suggestion about Gran Canaria - I donít really think of it as anything special as itís just the life weíre living now! I donít want to detail Mr Snowís thread but if more people are interested maybe Iíll start a journal or blog. For now Hereís a quick pic of a sunset I took on my phone a couple of weeks ago from the end of our road; the faint peak at the extreme right is mount Teide on Tenerife

Thanks DoubleH. Nice picture. I concur with Mr Snow since this thread is about living and not the wealth tax!! It's been a long rainy winter in the Pacific North Wet and some sunny pics and blogs are certainly welcome, so thanks.

MrThatsDifferent

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #106 on: February 16, 2020, 10:19:07 AM »
Some lively discussion here on wealth tax in Spain and some good points made already. I just wanted to jump in and point out a couple of things that make it less scary than it sounds at first.

Firstly the tax is in bands and only applies to assets above each band - there is a summary here https://www.spanishpropertyinsight.com/tax-and-pensions/spanish-wealth-tax-patrimonio/

So the top rate of 2.5% only apples to assets more than EUR 10.7m per person over the 700k exempt amount. Thatís a pretty fat fire sum to talk about.

If you look at a more likely generous fire example of EUR 2m subject to the wealth tax for a couple, the tax would only be due at 0.2 or 0.3% on the 0.6m of assets above the combined exemption of 1.4m, which would come to a couple of grand a year. For a typical American this could easily be offset by the lower cost of health care you would pay in Spain (eg we pay about EUR 120 per month for comprehensive private health insurance for family of 4)

So itís not like there is a limit at 1.4m and if you go over it a little bit you will pay tax on the whole 1.4 or anything like that.

But the situation is even better than this. My understanding is that investments held in private pensions including a 401k are exempt from wealth tax, which will likely exclude a chunk. IRAs seem like a grey area as Spain doesnít really have an equivalent, but I believe there is an argument can be made that they should also be excluded.

Then if you say own an investment property in USA the wealth tax looks at what you paid for it, rather than the current market price which could make a big difference. And of course you net off any mortgage you have on the property and only pay on the net amount. Plus donít forget the tax doesnít include your property in Spain unless it is over 300k each / 600k for a couple which will go a fair way in most places.

If you factor all of these in, I suspect most people on this forum shouldnít have too much to worry about from the wealth tax.

Awesome post, thanks for clarifying the details on the wealth tax! 🙏

Yeah, this is my reading as well regarding 401ks, and presumably superannuation in Australia, although a bit different but essentially the same. So, if you had a bulk of your money in those accounts and your non retirement accounts were less than $700k euros per person, you wonít be subject to any wealth tax. If youíre living off of that money, then no other income taxes in Spain. Donít own a home and you avoid those taxes as well. Yes, this seems doable. Spain is back on the table!

GreenEggs

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #107 on: February 16, 2020, 01:07:32 PM »
We're visiting Spain in May.  It's the first time for me & I'm really looking forward to it.  :)




I doubt I'll ever be able to get DW to leave family behind, but I'm so tired of US politics the thought of finding a better country sure is appealing. 








Paul der Krake

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #108 on: February 16, 2020, 02:33:55 PM »
We're visiting Spain in May.  It's the first time for me & I'm really looking forward to it.  :)

I doubt I'll ever be able to get DW to leave family behind, but I'm so tired of US politics the thought of finding a better country sure is appealing. 
Spain (and the EU in general) has a lot of problems too, just different ones, and not readily visible to short-term visitors.

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #109 on: February 16, 2020, 05:22:35 PM »

Spain (and the EU in general) has a lot of problems too, just different ones, and not readily visible to short-term visitors.
What are the Spain specific problems that will affect expats, Paul? We need the skeptics view!!

Paul der Krake

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #110 on: February 16, 2020, 06:40:41 PM »

Spain (and the EU in general) has a lot of problems too, just different ones, and not readily visible to short-term visitors.
What are the Spain specific problems that will affect expats, Paul? We need the skeptics view!!
The bearish case for Spain is the poor economic environment that caused a modern-day diaspora 10 years ago. All of a sudden there were thousands of young Spaniards in the streets of London. The more affluent ones were being sent by their parents to study at a foreign university to improve their chances on the job market. The less affluent ones were doing whatever odd jobs the British economy would have them do because it was better than living with their parents at home.

https://en.wikipedia.org/wiki/Youth_unemployment_in_Spain

There's a reason everything is so cheap out there, it's because wages are low and professional development prospects are bleak. Can you name a large, innovative Spanish company? Didn't think so.

The next door neighbor France has simlar problems, but it's not as dire. Both countries have serious demographic problems that will require significant big sacrifices if their social model is to survive. But hey, at least they're not as screwed as Italy, the perennially broke peer.

Now the "good" news is that as an early retiree, you can fully insulate yourself. That's true stateside too: the opioid epidemic or Trump's latest stunt likely doesn't affect you at all if you're an upper middle class American.

Will Spain work for you? I don't know, probably? You have money, which is the ultimate cheat code everywhere in the world. But you're still part of the larger ecosystem, and that ecosystem is not healthy. That doesn't mean you shouldn't go, but don't fool yourself and only paint the picture you want to see. Find the local newspaper of the city you're targeting and read about what ails the locals.
« Last Edit: February 16, 2020, 06:42:44 PM by Paul der Krake »

MrThatsDifferent

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #111 on: February 16, 2020, 07:55:02 PM »
@Paul, not sure I can rally argue with that, still wouldnít stop me. Arenít too many perfect places, however Spain isnít so broken, it wonít work. I love the: money is the ultimate cheat code. Absolutely true.

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #112 on: February 16, 2020, 09:03:07 PM »
These are excellent points and agree with the "cheat code" statement. I noted that the POR youth unemployment rate looks better than Spain.  But it looks like a lot of Europe is going to face demographic problems since the level of education needed to hold a job keeps going up and some of the entry level unskilled jobs get displaced by AI.


MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #113 on: February 17, 2020, 10:00:10 AM »

Spain (and the EU in general) has a lot of problems too, just different ones, and not readily visible to short-term visitors.
What are the Spain specific problems that will affect expats, Paul? We need the skeptics view!!
...

Will Spain work for you? I don't know, probably? You have money, which is the ultimate cheat code everywhere in the world. But you're still part of the larger ecosystem, and that ecosystem is not healthy. That doesn't mean you shouldn't go, but don't fool yourself and only paint the picture you want to see. Find the local newspaper of the city you're targeting and read about what ails the locals.

As already noted - the demographic problem is a western world problem in general and a European one very much. Same issue in Sweden.

It might be cynical but most of Spains problems doesn't effect me directly as they are of more national character (unemployment, industry, etc) at the moment. Swedish problems with violent gangs and crowded emergencies rooms would affect me directly.

Local problems/news in Palma de Mallorca (in english) can be found here: https://www.majorcadailybulletin.com

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #114 on: February 17, 2020, 10:03:19 AM »
New post on our current, future and possible frugal budget today! Might be helpful, or worthless, i don't know. :-D
https://palmaonfire.com/blog/2020/02/budget-time-part-1/

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #115 on: February 17, 2020, 08:44:45 PM »
New post on our current, future and possible frugal budget today! Might be helpful, or worthless, i don't know. :-D
https://palmaonfire.com/blog/2020/02/budget-time-part-1/

Interesting. School is 1K Euros a month?

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #116 on: February 18, 2020, 01:21:51 AM »
New post on our current, future and possible frugal budget today! Might be helpful, or worthless, i don't know. :-D
https://palmaonfire.com/blog/2020/02/budget-time-part-1/

Interesting. School is 1K Euros a month?

Public school: Free
State-Private (Concertadas): 20-200Ä/month
Private: Most 450-600Ä/month

We got several little bastards so we pay 1K Ä / month. :-)

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #117 on: February 18, 2020, 01:30:37 AM »
Almost forgot, you usually have some extra fees on top of that. The Matricula fee ("one-time-fee" / new client) which varies a lot, 100-4000Ä / child. Lunch, books and school uniform might, or not, be separate as well in some schools.

keyvaluepair

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #118 on: February 20, 2020, 10:02:43 AM »
Local problems/news in Palma de Mallorca (in english) can be found here: https://www.majorcadailybulletin.com
It was interesting that several of the problems seemed either tourist or traffic related. As a cyclist, the article on a cyclist getting killed struck home. How do you find cycling there?

dougules

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #119 on: February 20, 2020, 10:36:35 AM »
For the folks on here from the US and Canada, I'm curious what the draw is to Spain over Latin America. 

spartana

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #120 on: February 20, 2020, 03:07:40 PM »
For the folks on here from the US and Canada, I'm curious what the draw is to Spain over Latin America.
For me it is a completely different cultural experience. Very European, Moorish, and Arabic compared to most areas in Mexico, Central and South America. As a single woman living and travelling alone thru out Spain I also felt extremely safe compared to many places in S. American. I lived in a small coastal.town about 45 minutes outside Girona (fabulous biking btw)  and never worried about my safety no matter what time of night or if out of town late at night walking, biking, or taking buses or trains any where. Plus very easy cheap access to cooler weather areas - Andorra for example - and to other "different" countries and cultures.

ETA: While I wouldn't live in Spain again if I ever moved out of country, I liked the ease and safety of getting around any where in Europe. I would move to Germany or a more northern European country like Sweden as I like the weather better then Spain. Oh and I LOVE the architecture and history (pre-Roman as well as Roman) in Spain.
« Last Edit: February 20, 2020, 03:18:19 PM by spartana »

Paul der Krake

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #121 on: February 20, 2020, 04:22:23 PM »
One is a first world country, the other is a loose group of second-to-third world countries.

dougules

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #122 on: February 21, 2020, 10:30:18 AM »
For the folks on here from the US and Canada, I'm curious what the draw is to Spain over Latin America.
For me it is a completely different cultural experience. Very European, Moorish, and Arabic compared to most areas in Mexico, Central and South America. As a single woman living and travelling alone thru out Spain I also felt extremely safe compared to many places in S. American. I lived in a small coastal.town about 45 minutes outside Girona (fabulous biking btw)  and never worried about my safety no matter what time of night or if out of town late at night walking, biking, or taking buses or trains any where. Plus very easy cheap access to cooler weather areas - Andorra for example - and to other "different" countries and cultures.

ETA: While I wouldn't live in Spain again if I ever moved out of country, I liked the ease and safety of getting around any where in Europe. I would move to Germany or a more northern European country like Sweden as I like the weather better then Spain. Oh and I LOVE the architecture and history (pre-Roman as well as Roman) in Spain.

Makes sense.  I am surprised to hear Spain described as so safe.  I had the impression that it was a country where you needed to maintain a certain amount of awareness of your surroundings. 

One is a first world country, the other is a loose group of second-to-third world countries.

I understand what you're saying, but saying it like that could be perceived as a bit derogatory. 

spartana

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #123 on: February 22, 2020, 05:05:37 PM »
I found most of Spain to be just as safe as any other European country. As a single woman I did get hassled more by men in southern European countries but nothing threatening. In big cities you have to be a bit more vigilant in some areas but no different then most cities in.the US. And doing things like long distance bike touring alone (and maybe wearing shorts etc) is very much the norm in all of Europe but would feel very unsafe in many parts of Mexico or S. and C. America. Same with living alone and you g out at night. Just my experience which may be different then other peoples. There's also the first world aspect Paul mentioned above. Some parts of Mexico and Latin America, outside cities and certain areas within cities, are very much third world/developing nation-like conditions.
« Last Edit: February 22, 2020, 05:09:09 PM by spartana »

AlanStache

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #124 on: March 01, 2020, 02:11:23 PM »
PTW.

MrSnow

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Re: Moving abroad to live that frugal FIRE life in Spain
« Reply #125 on: March 01, 2020, 02:36:11 PM »
Local problems/news in Palma de Mallorca (in english) can be found here: https://www.majorcadailybulletin.com
It was interesting that several of the problems seemed either tourist or traffic related. As a cyclist, the article on a cyclist getting killed struck home. How do you find cycling there?

Spot on, the majority of the experienced(!) problems are related to tourism and traffic. Traffic is a little bit like a Grand Theft Auto game, rules can be followed but not really if you don't feel like it. ;-) Joking aside, we have a problem with bad/ignorant drivers as well as driving and drinking here. Its supposed to be legal to drink a beer or two but iīve seen people drinking a lot more and getting behind the wheel.

That said, Mallorca is considered one of the best bicycling places in Europe and there are tens of thousands of cyclists coming here to train every year. I guess its both the mountains as well as the flat areas that appeal.