All Forum Posts by: Joaquin Camarasa

Make sure the basement area has egress and it is up to code to be considered a livable space. 

@Erwin Groenendijk just reread this and understand that as an SL I would be able to deduct expenses. Thanks Erwin, always very helpful.

 Thanks for sharing Erwin! 

I have a couple more questions on the subject. 

The 15% and eventually 25% on the third year. Are you taxed on the net or the gross income produced as a non-resident ?

May you deduct ongoing costs from the property like mortgage interest, replacing appliances, property management costs, etc with an SL?

Here in the US you are taxed on the net, as you can deduct mortgage interest or any repairs you might do. This would be interesting to know. 

At least when I attempted it, I discovered I could get a mortgage as a non-spanish resident usually minimum 30% down, although it depends for each bank. 

It is true that the laws are pro-tenant. I currently have a family member dealing with "okupas" in one of his investment properties and he is been fighting it for well over a year to get the property back. 

The chances of this situation happening are not high but it does happen. You need to make sure your tenant screening is very thorough and also your property security is top notch. If it is a primary residence it gets resolved fast, however when is an investment property it is a real pain to get them out. 

For what I know Spain and the US have a treaty between the two. You either pay taxes in the US if you are a resident here or in Spain if you are a resident there. I probably have 4-5 years before I go to Spain for a while.

My plan is to set up a structure to keep my 3 US properties paying taxes in the US. I have looked into setting up a trust and place each property under a LLC, and keep all under a family trust.

You might have some insight that might be helpful on what is the most efficient way to do this. As you mentioned, if by the time I reside in Spain, it'd all be taxed through the Spanish tax system, it would have serious tax implications. 

I am originally from Valencia, Spain. I have lived in the US for about 10 years. 

I seriously looked into purchasing a few years back in Valencia but decided ultimately the US had more potential. As far as I know, your assumptions about the tax implications are correct for non residents, it was one of the main factors that stopped the idea of investing in Spain for me. I know I will be back eventually but if I remain in the US for many more years the tax implications are a bit scary. 

I am unsure if I could purchase a property through an LLC/SL based in Spain and what would be the taxation using this system. Sharing this idea in case others can comment on it.

The key questions here are:

How much you make renting by the room?

How much would you make renting the property as a whole instead of by the room?

Once you have the difference, assuming that both options fully pay the mortgage, consider wether or not all the little tasks you do daily while self managing are worth the extra income.

Probably a key thing to think about is, How long are you planning to live on it? 

Are you planning to leave a few years and sell it or are you planning to keep it as an investment in the future?

If the second option is the answer, which option will be easier to property manage? Who will be your renters? 

I think those are questions that will tell you what's better for your situation. 

At 85k salary, a townhome Northern Virginia is out of reach at the moment. You could attempt to househack a townhome around Fort Washington MD. You can find townhomes around 350-400k range and you would not be too far from Northern Virginia. Generally speaking its better to be a landlord in Virginia as the laws are more pro landlord. 

You would have to analyze if it's better for you to purchase a condo in NoVa, a townhome in Fort Washington MD or if its better for you to rent. I think those are your options at the moment. 

There are mortgage programs in VA, DC, MD that could get you in a property with a very low downpayment. Some of them no money down, some of them 1%. As others said, start saving.
You could also try to aim to get all closing costs paid by seller. Now, the market is competitive so you would have to aim for the properties that are less attractive. Happy to talk more about all options.