It’s Not Only About
Sept. 5, 2008
n How Do I Know The Title Is
Good?...Are You Sure It’s Safe?...Do I Still Owe U.S. Taxes?...Do I Pay
Local Taxes, Too?...And Other Questions From Fellow Would-be Retirees Abroad
In D.C. Yesterday…
The Inflation Rate…The National Bird…The Wall Plug Voltage…And The Annual
Banana Production Of, Say, Guatemala? Here’s How You Find Out…
n International Regatta In
Panama This Weekend…
n “It’s The Day-to-day
Quality Of Life Living In A Foreign Place That’s So Appealing”…
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Opportunity Letter Reader,
Attendees at the “Retiring
Abroad…A New Place To Call Home” session at the AARP Life@50+ event in D.C.
yesterday had questions:
n “When buying real estate in
another country, how do you know that you’re getting the correct title? I
mean, what title do you want? Is it the same as in the States?”
Ideally, you want
freehold title. And, no, not all property in all parts of the world is
sold freehold. Sometimes it’s sold leasehold. Sometimes it’s sold as rights of
Sometimes it’s sold by
someone who doesn’t own it.
In some parts of the world,
the history of ownership of a piece of real estate (that is, the title) can be
Don’t try to sort it out on
your own. Engage the services of a local attorney with experience helping
foreigners buy property in that country. And make sure he’s your attorney (not
the developer’s attorney, not the seller’s attorney, not your agent’s
attorney…you want to hire your own, independent guy).
And invest in title
insurance. It’s available now in most markets where you’d want to buy
(including Panama, Nicaragua, Costa Rica, Belize, Uruguay, Argentina, etc.). It
costs less than 2% of the purchase price. And it buys you peace of mind. I
n “How do I know these places
you’re recommending are safe? I mean, look at what’s going on right now in
Thailand. How do we know a place is stable…and will remain stable?”
There are no guarantees, of
course, and none of us can see the future. You do your research, you visit and
scout in person, and you make a determination. Is the place “stable” enough for
Paul Terhorst reported the
other day that Thailand, for example, “unlike in Europe and the Western
democracies, enjoys a small, ineffective government. No checks in the mail, no
welfare state, no half-trillion-dollar deficits. The government can
self-destruct—and does so with some regularity—without anyone really noticing…”
Administrations come and go
regularly and sometimes dramatically in Ecuador, as well, for example. For
Ecuadorians, this isn’t instability…it’s the way of government.
Know yourself. What are you
comfortable with? If you want absolute stability and peace of mind, consider
peaceful, orderly Uruguay, say, or Belize.
On the other hand, if
you’ve the stomach for it, remember that local political troubles can translate
As Lief wrote this morning
to remind me (after reading discussion in our Mailbag this week about the
current troubles in Thailand):
“People thought I was crazy
for going to Argentina 10 months after their financial crisis back in 2001.
There were still riots (organized protests, really) in the streets of Buenos
Aires. Wasn’t I worried for my safety, people asked?
“I used common sense, and,
no, I wasn’t concerned about my safety. I was a little concerned, though, that
if I didn’t act quickly I’d miss my chance. Real estate prices had already begun
going back up by the time I hit BA. I arrived maybe 10 weeks after the absolute
n “As an American abroad, do I
still have to pay U.S. taxes?”
You still have to file U.S.
taxes. Every year. No matter your country of residence and no matter how long
you’ve been living outside the States.
However, you may not have
to pay U.S. taxes. That is, you may not owe anything to Uncle Sam. Depending on
how much money you’re earning each year and where you’re earning it, once you
take into account the earned-income exemption for Americans abroad and other
deductions and exemptions you may be eligible for, you may well find yourself
living U.S. tax-free.
But that is not to say…it
is never to say…that you’re free of your U.S. tax filing obligation. The key is
to understand the distinction between having a tax filing obligation…and
actually paying tax.
n “Will I owe taxes in
the country where I’m living?”
This depends largely on
your residency status. If you’re a full-time legal resident of a country, then,
yes, you’ll acquire a local tax obligation…in addition to your U.S. tax
obligation if you’re an American. Again, though, that is not to say you’ll owe
tax. You’ll be required to file a local return, but, depending on your level of
income and where and how it’s sourced, you may not actually be liable for any
n “What would my life be like,
I have no idea…and the only
way to find out is to get up now and make the move.
I can tell you this,
though: Every day abroad will bring new experiences, discovery, and adventure. A
fellow reader explains it well in today’s Mailbag. See below.
P.S. From D.C. late
yesterday afternoon, I took a taxi north to Annapolis, Maryland, to spend the
weekend with my daughter, who this week commenced her second year at St. John’s
When I was last here, two
months ago, the streets of Annapolis were awash with tourists. But that was
summer, and summer officially ended in this part of the world last weekend. Now,
the Middies are in residence at the Naval Academy, and the Johnnies, as they’re
called (including my daughter), are installed at St. Johns. And, I’m pleased to
report, they must all be chained to their study desks, for I saw nary a soul as
I meandered the brick-paved lanes of old town last night…
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How big is the army in,
say, Mexico? What wall plug voltage do they use in Uruguay? Who is the world’s
biggest exporter of bananas? What’s the current rate of inflation in Ireland?
The national bird of Guatemala?
Costa Rica correspondent
David Stubbs writes today with a resource to help you find the answers to those
questions and to nearly any others you might have about nearly any country in
the world. It’s called Nation Master:
This Sunday, Sept. 7, the
Panama International Regatta will set out from the Balboa Yacht
Club at 9 a.m. Finish line is Taboga Island, where all participants will
celebrate with a party on the beach.
This isn’t a race…just all
in good fun. And it’s free.
FROM THE MAILBAG:
“Mesa, Arizona, is the
best-value-for-money-spent place we’ve ever lived. So why don’t we live there
full-time? Because it is bland. Everything looks the same. Houses are painted
different shades of beige…there are strips malls on every corner…
“Here in Chapala,
horses wander down the cobblestone streets with and without their owners,
vendors sell their wares door-to-door, and the houses are painted whatever color
is on sale at the paint store. Kids play in the street or the park without fear,
and everyone is proud of his community.
“We hear mariachi music
from nearby restaurants wafting through the air each afternoon starting around
4. Neighbors greet us with smiles and questions about our family. There’s an
openness that’s missing in the States. This place is colorful, engaging, and
teeming with life.
“This retire overseas idea
is not only about the money. There are places in the States where you can live
very cheaply. But there’s much more to it than that. It’s the day-to-day quality
of life living in a foreign place that’s so appealing.”
-- Billy and Akaisha
K., Chapala, Mexico
Billy and Akaisha have
written a book about their experiences
living abroad called “The
Adventurer’s Guide to Early Retirement.”
You can buy it