The 20 Best Places in the World to Buy Real Estate in 2024 (IL)

International Living December 2023
Ronan McMahon

Baja California is in the early stages of a 30-year upswing. Lesser-known areas of central and northern Portugal are poised to boom. Demand is skyrocketing for high-end properties in walkable beach cities in France, Spain, and Mexico…

Those are some of the takeaways from Real Estate Trend Alert’s (RETA) inaugural International Real Estate Index.

I founded RETA 15 years ago with one goal: to give like-minded folks a way to pool our buying power and profit from the best real estate deals—in the best markets—around the world.

Over the past decade and a half, my team and I have scoured the globe to find those markets and those deals.

Add it up, and we’ve spent months—sometimes even years—on the ground in world-class destinations, such as Cabo San Lucas, the Riviera Maya on Mexico’s Caribbean coast, Portugal’s southern Algarve region, the Costa del Sol in Spain, and the south of France.

We’re also constantly looking for the "next places." In just the past year, we’ve scouted Portugal’s Azores islands, Montenegro, the eastern coast of the Dominican Republic, and Spain’s "green zones," to name but a few.

Every December and January, we’re all bombarded with a cavalcade of end-of-year lists and forward-looking best-of rankings. In the real estate space and beyond, most are either thrown together by uninformed writers or researchers who look at macroeconomic trends… but have little to no firsthand market experience.

Property indexes will often rank major economic and financial centers like San Francisco, London, or Singapore. But established markets such as these typically have very high entry and holding costs and, as a result, low rental yields. Moreover, when capital appreciation does occur, it tends to happen incrementally.

That’s why, after 15 years of scouting, and delivering hundreds of RETA deals, I’m ready to unveil our first-ever ranking of the best places in the world to buy real estate… one that takes a different approach.

To create the RETA index, we looked at destinations that excel in at least two of the following areas: value for money… growth potential (and thus the potential to deliver strong capital appreciation)… strong appeal to short-term and long-term renters from home and abroad… and excellent quality of life.

Destinations were ranked based on 10 categories until we arrived at the top 20. (You’ll find the complete list of rankings by categories and our categories explained below.)

In every case, I or a member of my team has investigated the market in person. And for a considerable number of them, we predicted their rise

Today, I’m giving you an in-depth look at the top five real estate markets, starting with a few key patterns that emerge from the overall results…

KEY INDEX TAKEAWAYS

Portugal, But Not as We Know It

Portugal features prominently on the index, with three markets in the top 20, but absent are the Algarve and Lisbon, the country’s traditional bastions of foreign real estate investment.

There’s an important reason for this… After the global financial crisis, Portugal enacted a number of policies to attract foreign capital… such as offering golden visas and abolishing rent controls.

The Algarve, and even Porto, are now basically maxed out. You can still buy in these markets as lifestyle plays… but the days of affordable entry prices and rapid capital appreciation are largely behind us.

As a result, investors are now looking to alternative Portuguese markets such as the Silver Coast, the charming town of Caminha on the northern border with Spain, and the island of Madeira.

From Sea to Shining Sea… in Mexico

Two of the top three performers on the index, Cabo San Lucas and the Riviera Maya, are coastal resort destinations in Mexico. Their popularity derives in part from a much larger trend: the rise of the long-term remote worker.

Even before the pandemic, I met plenty of folks—especially from Texas and the West Coast—who would spend a few weeks or months working from Cabo. But the pandemic has kicked this work-from-anywhere revolution into overdrive.

Today, Cabo is so popular with remote workers and other long-term renters that the market is more closely aligned with California, and other property markets in the southern US, than surrounding Mexico.

It’s a similar story on the Caribbean side of the country, where the Riviera Maya now functions as an offshoot of the Florida market.

Owners can charge high prices for rentals in these markets, and prices will continue to rise as the so-called Zoom Boom becomes a more permanent staple of industry… and workers gain the flexibility to earn from anywhere.

Walkable, Urban, Beachy Destinations

As growing numbers of professionals are decoupled from the office, we’re seeing strong demand in smaller, affordable coastal destinations that offer a high quality of living.

Three of the top 10 destinations on the index reflect this: Estepona in Spain, Montpellier in France, and Playa del Carmen on the Riviera Maya.

And then there’s our inaugural index winner…

1st Place: Los Cabos, Baja California Sur, Mexico

Cabo, a thriving boom town of 350,000 people, excels in virtually every category on the index.

In terms of Climate, Quality of Life, and International Appeal, this market is a no-brainer. Cabo boasts postcard-perfect shores lined with luxury resorts and residential communities. There are shopping malls, high-end restaurants, world-class marinas, championship golf courses, and an international airport that has expanded several times over the years to accommodate increasing visitor numbers. (Yet another record for visitors was hit in the first quarter of 2023, with over four million flying in.)

While Cabo has long been a haven of celebrities and the ultra-wealthy, it has evolved to attract what I call the "ordinary rich"… executives with work-from-anywhere jobs and wealthy retirees in search of perfect weather.

I spend some time in Cabo every winter. I own six properties here. There are all sorts of restrictions on building here, yet people just keep coming.

Today, luxury two-bed condos easily rent long-term and hassle-free for $3,500 per month and up. The short-term rentals market is also strong, given the constant influx of high-end tourists. That’s why Cabo scores a perfect 10 in Income Potential.

That said, the window of opportunity—meaning capital appreciation and big rental yields—is closing fast. Amid the property supply crunch, prices are skyrocketing.

The average sales price of a Cabo condo through September this year was $627,729, according to brokers using MLS data.

I figure the sweet spot for investing in luxury condos in Cabo is $400,000 to $600,000, but quality resales in this range are increasingly rare.

By leveraging RETA’s group buying power, I’ve been able to bring our members numerous opportunities in Cabo, including some spectacular recent deals. For instance, In July 2022, a condo with a RETA-only price of $249,000 was sold for $425,000—an increase of $176,000. A broker recently told me he figured these will be worth $500,000 plus on delivery.

But even with our insider connections, opportunities like these are becoming hard to find.

That’s why I’d recommend any investor interested in Cabo act sooner rather than later.

I’d also advise interested buyers to look at other emerging markets in Baja California. As Cabo gets maxed out, money will flow into less-visited coastal destinations on the peninsula, launching what I predict will be a multi-decade upswing.

Loreto, in particular, has major growth potential… which is why it places 17th on our index. 

2nd Place: Caminha, Portugal

The difference between the No. 1 and No. 2 spots on our index couldn’t be starker…

While Cabo is world-famous, Caminha is virtually unknown, even among the millions of European vacationers who flock to Portugal each year. (Read on to find out why Jeff Opdyke is ready to move to Caminha.)

Yet this small, charming town in the far north of the country offers the best value you’ll find anywhere on the Portuguese coast… which is why it scores a perfect 10 for Relative Value.

Caminha is about an hour north of Porto and is separated from Spain by only a river. It has a beautiful old town surrounded by verdant countryside on one side… and stunning Atlantic beaches on the other. When I visited recently, I found a four-bedroom condo at the center of town listing for just €140,000. For €395,000, there was a large 3200-square foot house overlooking the river and Spain.

Then there were the real jewels of Caminha, the Casas da Índias—grand villas built from colonial wealth. All around town, I saw shells of these buildings sitting empty… waiting for someone to bring them back to life.

I figure Caminha is on the cusp of a boom. The wealthier visitors and secondhome owners from Northern Europe and North America aren’t coming yet, but I believe they will… and when they do, they’ll drive prices higher.

3rd Place (Tied): Riviera Maya, Mexico

For two decades I’ve been scouting the Riviera Maya, an 80-mile stretch of Caribbean coast in the northeast of Mexico’s Yucatán Peninsula. This region’s massive economic boom is built on one of the biggest tourism industries in the world. Last year saw a record-shattering 30 million people pass through Cancún airport, and 2023 is on track to exceed this high.

Over the years, a "Path of Progress" rolled south along the coast… reaching first Playa del Carmen and then Tulum.

Once a sleepy seaside village, Playa has been transformed into a chic resort city. This distinct atmosphere has made Playa a favorite of not just American visitors, but also Europeans, Latin Americans, and Mexicans from other parts of the country. It’s also a varied market, attracting snowbirds, part-time expats, extended vacationers, and the work-from-home crowd.

As in Cabo, these folks aren’t looking for cheap. They want amenities… and to be by the beach. And they’re willing to pay $2,000… $2,500… or more to get it.

Trouble is, there just aren’t enough properties. And that situation isn’t changing any time soon. As scarcity meets growing demand, prices are rising, creating an opportunity for investors.

Supply-wise, it’s a similar tale farther south in Tulum.

The spectacular coastline of Tulum first drew hippies who drove through Mexico in camper vans to frolic naked in the surf. Even when I first visited in 2004, it was tiny and undeveloped. Today, Tulum is one of the world’s trendiest destinations, a favorite of models, socialites, influencers, celebrities… and anyone who wants to catch a glimpse of them.

As in Playa, the challenge here is a lack of developable land. North of Tulum lies Parque Nacional Tulum, and the spectacular Mayan ruins that draw millions of visitors each year. To the south is the vast 2,039-square-mile Sian Ka’an Biosphere. More visitors will come. The Mayan train is under construction… it’s a mega-project bringing tourists and renters from Cancún down to Tulum in huge numbers. And a new Tulum airport is scheduled to open in 2024 with a capacity for four million passengers.

The best days still lie ahead for this market.

3rd Place (Tied): Estepona, Costa del Sol, Spain

The Costa del Sol in southern Spain has it all: The weather is amazing (it has 320 sunny days each year)… the beaches are stunning… and it boasts historic towns and cities, incredible locally produced food, world-class golf courses, and shopping and entertainment.

In the pre-2008 boom years, development came hard and heavy to this region. Huge condo blocks and pricey vacation homes sprang up. Now, many of the most popular locations west of Málaga have been completely overdeveloped. Even the upmarket towns of Marbella and Puerto Banús have been impacted.

So, vacationers with money are looking farther down west…

Estepona, just 30 minutes from Marbella, is the next place in line to benefit from the Path of Progress. On my last visit, I was blown away by how much this picturesque, whitewashed town—one of the prettiest on the entire Costa del Sol—had come to life.

It offers great restaurants, the beautiful old town, and the beach. There’s a palmlined waterfront boardwalk, botanical gardens, and a glass-domed orchidarium.

And it still retains its traditional Spanish charm in a way that many other towns along this coast have not.

Prices in and around Estepona are rising fast, but it’s still possible to buy ahead of the Path of Progress if you move quickly.

RETA DEALS IN TOP LOCALES

From Los Cabos to southern Spain, I’ve brought RETA members excellent deals in many of the leading destinations on our index. A few examples…

• In April 2015, I bought my two-bed, two-bath Cabo condo alongside RETA members in Copala, in the master-planned gated golf community of Quivira. The RETA price was $336,156. Then, in January of this year, an identical condo two floors above me listedfor $725,000. 
• In 2020, I recommended condos in a community called Adega in Lagos in Portugal’s Algarve. One RETA member bought a condo there for €480,000 and has since sold it for around €700,000. 
• In 2022, RETA members could buy in The Village at Corasol, a beach community in Playa del Carmen on the Riviera Maya, from $258,600. A condo available to RETA members for $296,400 was later listed at $368,209.

3rd Place (Tied): Rocha, Uruguay

In recent decades, tiny Uruguay—wedged between Brazil and Argentina in South America—has quietly become a strong real estate investment, thanks to its safety and security, top-notch infrastructure, and democratic, business-oriented leadership.

Uruguay’s real estate market has long been centered on the luxury resort destination of Punta del Este, sometimes called the "Monaco of South America."

Today it draws huge crowds of everyday folks who want to rub shoulders with the rich and famous. In high season, the city’s population swells from 20,000 to 400,000.

The "in crowd" is looking for alternatives. That’s why many are heading to Rocha…

Rocha is located about one and a half hours east of Punta. Unspoiled nature is Rocha’s most important asset. It has the longest oceanfront coast in Uruguay, with 110 miles lined almost entirely with beaches. Inland, you’ll find nature reserves, lagoons, and forests. Yet despite its rural charm, Rocha still has modern infrastructure and conveniences.

Recent infrastructure improvements, like an airport, have made getting to Rocha much easier. And that means those seeking out a low-key destination are flocking here.

I heard about Rocha from connections in Uruguay’s business community… and people with beach homes in Punta. Many of them have told me they plan to build a beach home, or a second beach home, in Rocha. Those with a beach home already in Punta are building in Rocha to earn rental income. That explains why land along the immediate coast is already getting more expensive…

Rocha is squarely on the Path of Progress heading out of Punta… and this market is in the early stages of a multi-decade run.

HOW WE DETERMINED THE WINNERS

For the inaugural Real Estate Trend Alert International Real Estate Index, destinations were judged across 10 equally weighted categories on a scale of one to 10.

Certain categories are subjective.

For instance, the chic resort town of Juan-les-Pins—located in the city of Antibes, on France’s southern Mediterranean coast—scores a perfect 10 on Quality of Life, since it has everything: beaches, mountains, luxury shopping, fine dining, art galleries, cinemas, and golf courses.

Meanwhile, Costa Rica’s Southern Zone scores a lower score of seven because fine dining and entertainment options, while available, are far more limited.

However, some may prefer the secluded, natural environment of the Southern Zone to the bustling promenade of Juan-les-Pins.

The point being, examine the category definitions and determine which factors are most important to you. Those categories are:

Relative Value: This can be summarized as "bang for your buck." Most destinations listed in the index offer exceptional value when compared to major markets in the US and Canada, with 16 of the top 20 recording an eight or above.

Take, for instance, Umbria, Italy—one of six markets that scored a perfect 10. I’ve seen 10-bed villas with swimming pools listed there for less than €300,000 ($315,000). Consider what a similar sum would buy in most major US cities.

Climate: For this index, higher-scoring markets are warm and sunny, but not humid… the kind of places where you don’t typically need either heating or air conditioning.

International Appeal: This category is a measure of how popular a destination is among foreign tourists, expats, and the work-from-anywhere digital-nomad crowd.

This category also considers how internationalized a market has become, covering such factors as flight connections, internet connectivity, and visa requirements.

Path of Progress Indicator: A "Path of Progress" is any infrastructure that makes a place easier to get to (new roads, airports, or bridges) or more desirable (a five-star resort in a place that previously had only cheap hostels).

If a Path of Progress is moving toward or through a market, it’s a strong indicator of future growth.

Income Potential: This is how much you can expect to earn from renting out a property short or long-term, relative to the amount invested.

For example, Cabo and the Riviera Maya score very highly here, as high-end rentals are in huge demand in these markets, and wellheeled vacationers, expats, and work-from-anywhere professionals are willing to pay top dollar to get them.

Quality of Life: This category considers the availability of dining, shopping, transportation, healthcare, and entertainment.

Also factored in are natural attractions such as beaches and hiking trails, and overall appeal as well as the general environment. For instance, are public spaces and facilities safe, visually appealing, and well-maintained?

Ease and Cost of Transaction: This measures how difficult, time-consuming, and expensive the process of purchasing a property is for overseas buyers.

Umbria and Estepona are lower down the list here since the process of purchasing properties in Italy and Spain can be slow and expensive. Panama City scores highly since it’s a major global financial center, meaning real estate industry professionals are accustomed to working with international clients.

Stability: This covers political, economic, and social risk. Is the political environment stable, and is it likely to remain so? Is the economy strengthening or weakening? Are crime, corruption, or fraud prevalent?

Note that scores in this category reflect the particular market in question, as factors like crime levels and economic performance can vary widely within countries.

Availability of Bank Finance: This considers whether banks will provide mortgages to foreign buyers, and if so, how difficult accessing this credit is, and how favorable the terms are.

Holding Costs: This ranks costs associated with owning a property in this market, such as local or national taxes, insurance prices, and common ranges for HOA fees.

Ronan McMahon is IL’s international real estate expert. If you’ve been thinking of buying property overseas, but could use help with your search, consider joining Ronan’s Real Estate Trend Alert. Thanks to group buying power, members get access to best-in-class pre-construction properties in the right locations—at below-market pricing.

Living in Mallorca, Spain (IL)

International Living December 2023
by Megan Ritchie

• Name: Hilary Wilson 
• From: Melbourne Beach, FL 
• Living in: Calvià Pueblo, Mallorca, Spain

In 2008, Hilary Wilson, 44, traded her home state of Florida for life on the sea.

She joined the crew of a superyacht, working in locales ranging from luxurious St. Barth’s to the jaw-dropping Galápagos Islands. But still, Hilary couldn’t stop thinking about the first island where she’d docked on her itinerant adventures… Mallorca.

When she met her now-husband, the decision was made. A sun-seeking Brit, he wanted to stay close to his UK-based family, while Hilary wanted a warm climate similar to Florida’s. Mallorca, a two-and-a-half hour flight from Heathrow with a Mediterranean climate, met their needs.

A Village Between Sea and Sierra

Hilary and her husband rented in the residential village of Bendinat and the ritzy, portside Portopí neighborhood in Palma before settling on the quiet village of Calvià to raise their two young daughters.

Calvià is a mere 15 minutes’ drive from Palma, the capital city, just far enough to avoid the rush of seasonal tourism, though its beauty still draws visitors. Its historic buildings—most dating back to the 17th century, with a few Roman outliers—are fodder for history buffs and aesthetes alike. And the surrounding Tramuntana Mountain range, running along Mallorca’s west coast, is popular among hikers and bikers.

"It’s amazing," summarizes Hilary.

Their home is a five-minute walk from the village square, where Hilary picks up groceries at the weekly market. ("We were in Florida in March," says Hilary, "and we were shocked how much food costs in comparison. Here, you can buy fresh, local food for a family for €150 a week.") In a five-minute drive, she can be at the beach. Five minutes in the other direction takes her to the community pool in Es Capdellà, where locals and expats alike gather to cool off in the summer.

"My neighbors are all so friendly," Hilary says. Like her, many community members are expats, and Hilary reports that her kids are in school with peers from the UK, Germany, and Eastern Europe. Her daughters will grow up trilingual, as English, Catalan (a Romance language spoken in northeastern Spain), and Spanish are taught at the local public schools.

"I personally speak enough Spanish to get by," says Hilary, who’s just started another year of Spanish lessons, "but to be honest, a good portion of the people here speak English."

Another perk of living in Spain: healthcare, which she says meets all her needs… and beats out US medicine when it comes to cost and bedside manner.

"We pay €313 ($332) per month for private insurance for all of us," she says. "For some specialists, you may have to wait for an initial appointment, but otherwise you can go straight to urgencias (emergency room) if needed. The wait there is never longer than an hour."

Living Slowly Has Its Challenges

All the same, there are some cultural differences to overcome. The biggest: the siesta.

"Things shut down during the siesta hours on weekdays, close early on Saturdays, and completely close on Sundays," Hilary says.

She once found it inconvenient, but now, she says, "I’ve learned to like it and respect it."

More inconvenient is the paperwork. Immigrating, she says, can be a bureaucratic process, and it helps to have a good immigration lawyer before making the overseas move.

And while Hilary says that buying property is straightforward—she and her husband own their own home—she likewise recommends lawyering up. There are a lot of "illegal" properties on the island, she reports, especially in historic or rural areas. If a house has been renovated or built on too small of a plot (the current requirement is 14,000 square meters), it may be in violation of Mallorca’s strict property regulations… subjecting a buyer to increased taxes, a fine, or—in extreme cases—a demolition order.

"We put an offer on a home that turned out to be illegal," says Hilary, "and without our lawyer having put a ‘get out free’ clause into the option contract, we would have lost the deposit."

They ended up buying a bank-owned property. While Hilary declined to share the cost of their property, Calvià’s housing sells, on average, for €425 ($462) per square foot.

Despite the difficulties, she’d do it all over again.

And other family members have followed her lead. Her sisters-in-law and her brother have already moved to Mallorca with their families… and her parents will join them on the island soon.

The families plan to raise their children together, with the grandparents pitching in where needed.

"I’ve never felt alone here," says Hilary. "I have everything I need."

Living in Kandy, Sri Lanka (IL)

International Living January 2024
by Roland Dalton

• Name: Brendan Decker
• From: Houston, TX
• Living in: Kandy, Sri Lanka

After a year in Sri Lanka, my wife Lilly and I have no plans to return to the US.

We’d lived in Houston most of our lives. I’d retired from my job as an engineer at an energy company, and though we’d saved wisely, our life was still stressful. Lilly was suffering from osteoarthritis that cost tens of thousands of dollars to treat and left her inactive, and we were both tired of American politics permeating the culture.

Even before COVID-19, we’d felt the country was divided—but the political landscape became even more polarized during lockdown. We heard bickering in shopping malls, restaurants, on the street—and of course, on the news. We didn’t want to be a part of it, particularly when Lilly was already in physical pain.

A close friend working in Sri Lanka mentioned a treatment that had cured his own wife’s back pain: Ayurveda medicine, a centuries-old combination of traditional treatments like yoga, massage, acupuncture, and frequent soaks in fragrant herbal baths.

Kandy is the epicenter of Ayurveda treatment and offers it at local shops and luxury resorts alike. Perched on a plateau in mountainous central Sri Lanka, the city is home to well over two million residents, with around 10,000 expats and growing.

We decided we were too adventurous to stay put in the States, and applied for My Dream Home visas to make the leap to Kandy. The requirements were generally straightforward:

• You must be over 55 years old.
• You must deposit $15,000 or the equivalent in an approved bank in Sri Lanka.
• Monthly remittance of $1,500 for the principal applicant and $750 or the equivalent for spouse or dependents in an approved bank in Sri Lanka.

The application was processed in the capital of Colombo at the Department of Immigration and Emigration. The entire process took three weeks. We entered on a 30-day tourist visa, which we applied for online back in Houston, and brought only our passports, a passport photo, a certified bank statement, proof of supplementary income, and a Texas police clearance.

Now, a year later, we’re so glad we took the leap. The unhurried lifestyle, the crisp mountain air, and fresh food have undoubtedly improved our health. Lilly swears by Ayurveda medicine. After arriving, we met with Dr. J., who spoke perfect English (it’s the third official language of Sri Lanka) and was amiable and informative—a stark contrast with the condescension we were used to from doctors back in the States.

"We’ll begin with a treatment called Pinda Sveda, designed to assuage general aches and pains," he explained. "Then you’ll be soaked in warm oil targeting your painful areas, using muslin poultices of herbal powders." The treatment was continued with luxurious herbal baths, full-body warm oil massages, and the application of rich sandalwood pastes for two weeks.

Lilly’s back to playing lawn bowling and golf at the nearby Victoria Golf and Country Resort. Instead of watching the news, we take long walks through the nearby forests and tea plantations. Our favorite is the sprawling Kandy Botanical Gardens—said to be the best in Asia—and Bogambara Lake at the town center next to Sri Lanka’s most sacred temple, the Temple of the Tooth.

As an engineer, I also delight in taking the scenic eight-hour train ride from Kandy to the small hill town of Ella, passing through the local hills, forests, and tea plantations. Though it’s frequently named one of the most beautiful train journeys in the world, tickets cost only $1.80 (or $10, if you’d like to splurge on first class).

We spend the rest of our time enjoying Kandy’s wide selection of cafes and restaurants, many serving Western fare, as well as colonial gentlemen’s clubs and hotels—once used by the British to escape the heat. When we miss home-cooked food, we head to Secret Alley Café, which serves up full American breakfasts as well as smoothie bowls.

Sri Lankan food is a delicious variation on Indian food, cooked with copious amounts of coconut milk. Our favorite is lamparis, a meaty curry wrapped in a banana leaf and baked in a clay oven. It’s a combination of flavors from the Netherlands, Portugal, and Sri Lanka.

We have several expat friends from the States and Europe. Some are here running small textile businesses, since there’s a plethora of clothes factories just outside of Kandy. Others, like us, have come here for retirement. Lilly and I spend only $2,800 a month, including holidays in the Maldives and southern India. Some of our expat friends live a champagne life on a beer budget of $1500 a month, and enjoy a quality of life that rivals that of the US.

The Sri Lankan rupee has been falling for years, and we get such good value for our dollar that I sometimes feel like we must be getting stuff for free. Dinner plus drinks at a good restaurant costs under $15. A large beer only costs $1.

We pay $820 a month for a two-bedroom colonial home with a lush tropical garden (frequently visited by colorful birds) near the center of town. Our gardener, Mr. Jagarth, brings along grandchildren who delight in assisting (okay, sometimes hindering) his work. Lilly loves to spoil them with ice cream kept on-hand for their visits. We also have a wonderful maid called Sumina, who cooks mouthwatering local and Western dishes and looks after Lilly with devoted attentiveness.

Rent also includes cable TV… but we stay away from American news.

Moving abroad? What to know before taking the big leap

MoneyTalk August 22, 2023

Ever thought about moving to a new country to build your life, raise your family or even retire? If so, there are a number of things to consider to help make the transition smoother. Mindi Banach, Tax and Estate Planner, TD Wealth, joins Kim Parlee to talk about what people should know about this major life decision.

K: Have you ever thought about moving to a new country to build your life and raise your family in a new place? Well, if so, there are a number of steps to consider to help make that transition a bit smoother. It's a major change, after all, and Mindi Banach, Tax and Estate Planner at TD Wealth, is here to tell us what you need to know.

K: Maybe it could be maybe raising your kids a new place. Maybe it's retiring to a new place. But everyone, I think, has the fantasy of maybe doing something like that. So let's start from the beginning. What are the things you need to think about getting in order?

M: The first thing that you need to do is do your research. You want to understand what the custom and the cultures are in that new country, but you also want to understand the tax and the immigration laws. I mean, you're going to need to know what visa requirements that you need in order to live, work, or study in that country. In addition to researching, you want to understand, financially, can you afford to move? So understanding your financial plan, your financial budget. What is your living situation going to be? What is your transportation situation going to be? You want to make certain that your documents are in order-- so your passport, your vaccination card, your driver's license, your estate planning documents. Which documents do you need to update and which documents are you going to need to replace when you move to a new country?

K: I was thinking it was fun, and now I'm like, it's a lot of work.

M: It can be.

K: Yes, I think it is. OK, from a tax perspective—you named a couple little things in there, but what else do we need to think about? And I'm sure there's a lot.

M: Yeah, this is the big question. This is a loaded question. And the first thing that you really need to consider when it comes to a tax perspective is understanding your residency because here in Canada, the tax system is based on Canadian residency. So for instance, if you are a resident of Canada, you will be taxed on your worldwide income, and you likely will be required to file a tax return here in Canada. If, however, you are a non-resident of Canada-- and I want to emphasize and highlight we are not talking about Canadian citizenship. We're talking about Canadian residency. Again, if you're a non-resident of Canada, you're only going to be taxed on your Canadian source income. And whether or not you're going to be required to file a Canadian tax return, if at all, is going to be dependent on the specific type of Canadian source income you receive. One other thing that I do want to highlight here is that there is a possibility that you may be a dual resident of both Canada and another country. And if that's the case, you want to be concerned about double taxation.

K: Right, because everybody wants the full tax then.

M: Exactly. Now, Canada does have tax treaties with certain jurisdictions and certain countries that may decrease or eliminate that double taxation risk. But Canada does not have a tax treaty with every country. So if you are moving to a country that Canada does not have a tax treaty with, obviously, you may want to consider some pre-immigration planning, because you may be subjected to double taxation, which you don't want.

K: We don't want. The single taxation is hard enough as it is. OK, so if you are a Canadian resident, you're considered a Canadian resident from a tax perspective, it's probably somewhat similar to what it is today. If you are declared a non-resident, it's different. How does one become a non-resident? What does that entail?

M: So the determination of residency status is going to be on a case-by-case basis by the CRA. And the first thing you need to really assess is your residential ties to Canada. And the CRA actually has a list of what they consider to be the significant residential ties to Canada. So, for example, owning a home in Canada, having a spouse and/or dependents living in Canada-- those are considered significant residential ties. The CRA also has a list of secondary residential ties. So, for example, Canadian passports, Canadian driver's license, owning Canadian bank accounts. And in order to declare yourself to be a non-resident, it's not a matter of just making some sort of verbal declaration. You actually have to take some actions to become a non-resident. And what you need to do is that you actually need to sever your residential ties, both significant and the secondary residential ties, and then at the same time establish stronger residential ties to that new country. So for example, you want to be selling and/or leasing out your Canadian home and purchasing or renting a home in that new jurisdiction. You want to be closing out the Canadian Bank accounts and opening up new bank accounts in that other jurisdiction. Now, I do want to mention that there is a possibility that the CRA may take the position that they're going to reject your claim that you are a non-resident. They really do look at whether or not you've severed ties and established new ties in other jurisdiction. There is a form that you could file with the CRA to ask the CRA for their determination as to whether or not you are a non-resident or a resident. It's specifically on form NR73, but it is not a mandatory form that you have to file. It is voluntary.

K: You better be sure. This is not a halfway measure. What about departure taxes? Is that something that Canadians have to worry about?

M: Possibly, yes. It really does depend on the specific type of asset that you're going to continue to hold when you become a non-resident of Canada. Now, certain assets are exempt. So, for example, registered Canadian accounts like RRSPs and TFSAs, you're not going to be subject to a departure tax. You may not be required to pay the departure tax immediately. You may be able to elect to defer. But if it's above a certain amount, you may have to post a security.

K: If you become a non-resident, obviously, there's a benefit to you from a Canadian taxation standpoint, potentially. You have to kind of see that too. But there's also costs-- health care, benefits you may have been receiving. So just people need to be aware of that at the same time too.

M: Yes, absolutely. The reality is for certain provincial and government benefits that you may be eligible for, one of the requirements is that you need to be a resident of Canada. And so if you cease to be a resident of Canada, you may lose your eligibility for certain, for example, OHIP or any other provincial health care plan—GST, HST credits, Canada Child Benefit credits. Again, you may lose your eligibility for that. I do want to mention, if you become a non-resident, you may still be able to get Old Age Security, but taxes will need to be withheld-- usually at the standard tax rate unless there is a tax treaty in place.

K: And what if—I'm going to try and squeeze this one in. You mentioned earlier about RSPs, and TFSA, and other, let's say, non-registered investing accounts. How does that function if you're a non-resident?

M: So each one has their own implications. If we're talking about RSPs, there's not going to be a departure tax, and you're not going to have to pay taxes on it until you withdraw the money, again, the withholding tax rates. You won't be able to contribute any funds while you're a non-resident. With respect to a TFSA account, similar to RSPs, you will not be able to contribute to your TFSA account while you are a non-resident. You won't be taxed in Canada, but you do want to look into the tax laws and rules in that other jurisdiction that you are moving to, because they may treat RSPs and TFSAs differently. And with respect to non registered investment accounts, again, it's going to be dependent on the specific Canadian source income that you receive as to whether or not you have to pay taxes and, arguably, whether or not you're going to have to file a Canadian tax return. 

K: What about your citizenship? If you become a non-resident, is your Canadian citizenship at risk?

M: So there's nothing Canadian rules that indicate that you're going to lose your Canadian citizenship if you become a non-resident of Canada, certainly. But I do want to highlight if you are going to decide to renounce your Canadian citizenship, you do need to be a citizen of another country. You can't be stateless.

K: Last question—and I always ask this to you. Who should you talked to before you decide to make this somewhat gargantuan move?

M: Yes. There's going to be professionals you want to speak to, as well as non-professionals. So the professionals are the typical ones you think of-- your lawyer, your accountant, your financial advisor. But you also want to talk to the non-professional-- your friends, your family, people who have already made the move, people who live in that other country, because they're going to provide some valuable insight that a professional may not provide for you.

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Long Term Travel

Long term travel can be difficult because of stay restrictions in most countries. For example, the Schengen area of the EU allows a maximum of 90 days at which point you have to leave. If you are planning to move around within the Schengen, there is a handy Shengen calculator that helps keep track of your stay there to avoid overstaying your allowed visit time.

The EU is implementing, what is essentially a digital ID for foreign visa-free travellers in the Schengen Zone known as ETIAS, which stands for European Travel Information and Authorization System. From their website:

It is a completely electronic system that allows and keeps track of visitors from countries who do not need a visa to enter the Schengen Zone....
The legal procedures to pass the ETIAS have started in 2016, and the system is expected to be fully operational in November 2023.

The ETIAS is not yet implemented (as of August, 2022). The EU travel website will post updates on the program and when it will be in operation.

Another handy website is Sherpa which provides information on travel requirements for your destination depending on the passport you hold.

Here is a good video of a couple who travelled in Europe for a year. They detail how to avoid the visitation restrictions in the various areas of the EU. This primarily involves moving within the EU but going in and out of the Schengen area.

Slow Travel

From video from perpetual travellers 2GoRoam on their Youtube channel discussing "slow travel." This is the idea of extended stays in each location. 

They typically use AirBnB for accommodation and have discovered that stays beyond about 28 days provide a significant discount to shorter stays, sometimes up to 50%. 

They also try to stay in great out of the way places that are significantly cheaper to stay. Numbeo's global cost of living index is a good resource.

Cost of Living Overseas

On staying or living in other countries, advice can be found on many expat forums. One I found informative is Expat Exchange. Also, found in International Living, the website Numbeo has a global cost-of-living guide which is very helpful when looking for a place to settle.
On the healthcare side, there are a few indices that rank healthcare quality and each uses different criteria. The WHO rankings are based on quality and overall efficiency. For 2021 the WHO ranks France #1, Italy #2, Malta #5, Spain #7, and Portugal #12 in its world ranking (by comparison Canada is ranked 30th and the U.S. 37th). CEO World bases their ranking more strictly on the quality of healthcare. They rank, from 1 to 10, South Korea, Taiwan, Denmark, Austria, Japan, Australia, France, Spain, and Belgium.