Buying a US home from Spain

Your route into the United States

Spanish citizens can visit the United States under the Visa Waiver Program. To live there you need a status of your own, and for a mortgage that status is where the conversation begins: lenders offer standard loans to people who are lawfully resident, on a green card or a temporary visa. Business owners can use the E-1 and E-2 categories, open to Spaniards under one of the oldest treaties on the list. An E-2 needs an operating business, and a home is not one.

A holiday home bought while you stay resident in Spain is normally financed with a foreign national loan, on a larger down payment and at a higher rate. The guide to visa status and US loans explains each case.

What a US lender sees of your Spanish finances

Nothing you have built up in Spain shows in a US credit score. Request your CIRBE report from the Banco de España, which is free, and keep it with your tax returns and bank statements.

Lenders following Fannie Mae's rules need two years of US federal tax returns before they can count income paid by a foreign employer in foreign currency, want documents in English or translated, and require savings held abroad to be exchanged into dollars and held in a US-regulated institution before closing. Open the US account and start the transfer early, with every step documented.

From arras to closing

In Spain a deposit contract is common, and with penitential arras a buyer who withdraws loses the deposit while a seller who withdraws returns double. For the mortgage, the lender's binding offer holds for at least ten days and you visit a notary of your choice for free advice before signing. The notary then sends the deed to the Property Registry.

The United States has no notary in that sense and no built-in advice session. A title or escrow company, or an attorney in some states, handles the money and recording, and the usual timetable is 30 to 45 days from accepted offer to closing. Your protection is the set of contingencies in the contract. See how the US timeline compares with Europe.

Spanish tax when you buy abroad or leave

If you stay resident in Spain, a US home belongs in Modelo 720, valued at what you paid for it. After the first filing a new one is needed only when a block rises by more than 20,000 euros. The United States meanwhile taxes rent at source, at 30% of the gross amount unless you elect to be taxed on net income and file a US return.

If you leave Spain, two rules deserve a conversation with your adviser. The deduction for investment in a main home survives only for homes acquired before 2013. And Spain has a special regime for capital gains on a change of residence, which applies to shareholdings of long-term residents above high value thresholds. It concerns shares, not your home.

No estate tax treaty

Spain is among the EU countries without a US estate tax treaty. An estate tax return is required for a non-resident, non-citizen owner once US assets exceed $60,000, and a house will exceed that. Many buyers address this through the way the property is held or through life cover. Which approach suits you is a question for a specialist, and it is cheaper to ask before the purchase.

Questions people moving from Europe ask

Continue your research

• Getting a US mortgage after moving from Europe
• Funding a US home with European savings or home equity
• How long a US home purchase takes, compared with Europe
• Florida
• Start a personal US mortgage scan