Spanish island: wealthy American buyers and skyrocketing real estate prices

Experts say Americans seeking a better quality of life are buying up property in Spain, driving up prices. According to Spanish notaries, U.S. buyers purchased 1,162 properties in the first half of 2022, up 76 percent from the same period the previous year.

This trend, driven by wealthy families and retirees who are tired of the economic turmoil in the U.S., is driving up real estate prices for locals. The island of Mallorca in the Balearic Islands is among the hardest hit, according to a report by real estate company Savills, with prices there rising 15 percent in the year to June 2023. Rents on the metropolitan Isle of Palms have risen 75 percent over the past decade.

Experts say Americans are moving to Europe partly out of frustration with the situation at home. Gloriana Bonillo of real estateagency VDB Luxury Properties recently said: "I don't know what memorandum has been sent to the US in the last four years, but we have noticed a huge difference in the attitude of Americans from 2019." She added that the reasons for the move are crippling costs such as an expensive healthcare system and education problems.

The country is also attractive to foreign buyers due to its flexible visa rules. A visa for "digital nomads" was launched this year to make it easier for remote workers to live and work in Spain. Foreigners can also obtain a "golden visa", automatically granted when purchasing real estate worth more than 500,000 euros or investing in Spanish companies, banks or a government debt program. Spain has also introduced flexible new visa rules for foreigners.

Foreign buyers can also get an automatic "golden visa" when they buy a property worth more than $549,000.

Spain is also attractive to Americans who are interested in the "Spanish lifestyle." Most Americans seek to move permanently and often come with school-age children.

Americans looking to move to Spain should also consider the tax implications of moving. If they want to buy property in Europe, they will have to pay the tax upfront in the form of a "stamp tax". This can range from one to 2.5 percent and must be paid by the buyer within 30 business days of the change of ownership of the property. However, once this amount is paid, the owner no longer has to worry about property taxes. This differs from the U.S. system, which levies property taxes annually.