It’s raining again……..well, certainly here in the UK it is anyway.
It does this a lot, I shouldn’t be surprised by now. Especially what with it being a school holiday week for most – following a Bank Holiday weekend!
I know some people love it – but we’re not big fans of rain. It definitely focuses my mind on a question S and I have been thinking about a lot lately.
Where in the world do we want to live?
When The World Is Your Bivalve Mollusc (Oyster)
For most people, where you want to live is determined by external factors. Work, schools, family and friends all have a major input – alongside money.
But we’ve been location independent for over five years now. Since I quit my job in London, we’ve not needed to be anywhere in particular, from a financial perspective at least.
It’s actually quite an odd feeling at times. Apart from wanting to see family and friends, it’s entirely up to us where to be at any particular time of the year.
And as any regular reader will know, we’ve tried to make the most of that. Last year we actually spent more time away than we did in the UK. Even in those restrictive Covid years we still got away when we safely could.
Our travel style has changed over that time. What began as a desire to see and experience the wider world, has evolved. For us now, it’s far less of a bucket list of places to see, things to do. It’s become much more about slow travel. Living like a local. Staying in one place for longer, and really getting to know it – good and bad.
And as we’ve gotten to know some of these places better, we always end up asking ourselves:
Could we live here?
Come Rain Or Shine
It’s obviously an amazing question to even be able to ask ourselves. We’re incredibly lucky that our financial planning gives us this option at all.
Whilst we can’t go literally anywhere in the world, most places offer some sort of visa for financially independent people.
If you can prove you meet the minimum income requirements and aren’t going to be a drain on local resources, then ‘come on in’ seems to be the general message.
In reality, it’s not quite as simple as that clearly, but in general there are more options open to us than simply staying in the UK.
Which brings me back to the rain. Since being freed from the shackles of the office desk, it’s become obvious that we both thrive in the sunshine.
We love to hike, bike and generally wander around. Enjoy a chilled beer on a sunny patio.
A typical day for us when somewhere sunny will involve a long walk followed by coffee. Then follows a bigger walk or cycle, often for many hours. Usually accompanied by finding a couple of nice watering holes along the way. Evenings are usually chilled out affairs, resting the legs and enjoying some good food.
We both get itchy feet if stuck inside for too long. We do have an exercise machine we use regularly on these wet kind of days, but after that it’s much more sedate. Comfort food urges rise, the sofa beckons.
Basically, we are both naturally healthier and happier when the weather plays nice.
So we started asking ourselves – why not just live somewhere where it suits us better?
Where In The World?
Now there are an awful lot of places in the world to pick from when you aren’t relocating for a specific purpose, such as work or family.
Narrowing the choice down isn’t easy. Experience is a much better teacher than research for us here.
And so, every time we go somewhere new, we find ourselves wondering if this could be our new home.
What’s interesting is often the answer is ‘no’. The location in question may make for a fantastic holiday – but it’s not somewhere we’d be happy permanently.
Unsurprisingly, the weather is not the only thing that makes a place work for us. There’s a whole number of different factors that impact on it.
Culture, safety, affordability, language are a few major ones just for starters. There’s a big difference between enjoying somewhere for a few weeks and living there.
But we do have a few places we go back to again and again. And each time we spend longer there, it just starts to feel right to consider on a more permanent basis.
And top of the list right now is Granada, in Spain.
Why Granada?
Granada isn’t a place you hear too much about, especially if you aren’t talking about the Alhambra. It’s a little off the main tourist trail, from a UK perspective at least.
People tend to come for a day trip, a weekend at most. See the main sights, enjoy some of the free tapas and then move on.
As did we on our first visit, on part of a bigger trip exploring the south of Spain away from the coast.
But that was enough to hook us back for longer. We’ve now been back every year since that first visit. Each time we get to know it a little better, explore a little more.
We’ve tried it out at different times of the year. Enjoying sunny days in December, surviving the heat and general shut-down of August. The occasional downpours of April and the chilly mornings. Alongside all the glorious sunny days just made for hiking the local mountains.
There’s just something about this place that works for us. The culture, the food, eating out, the outdoors lifestyle, the hiking nearby, it’s all totally our kind of thing.
But we’re not naïve, everywhere has it’s issues. Especially if you’re living there and not just renting a holiday let.
Language is an obvious one. We speak enough Spanish to get by when travelling and basic conversations. But beyond that, not so much as yet.
And then there’s the financial side….
How Much Is It Worth?
We’ve put a lot of time and effort into organising our finances here in the UK. It’s kinda par for the course for anyone considering retiring early, right?!
And whilst not to the detriment of total returns, a big part of that has been to ensure we are as legally tax efficient as possible.
The UK still has a reasonably generous amount you can earn before paying tax.
Yes, the recent lowering of the capital gains allowance hasn’t helped. Neither did the freezing of the income tax bands while inflation carried on with it’s happy dance upwards.
But you can still, as of now, generate over £25k tax-free if you have your money organised to max out each allowance.
Main Tax-Free Allowances for an Adult in the UK (2023/24)
That means as a couple we can earn over £50k each year before paying tax – entirely legally.
If you throw in maxing out the use of ISA’s each year on top, it means we have ended up with a significant amount of our investments being tax-free here in the UK.
Regular readers might remember that we haven’t got anywhere near spending that much yet.
Move to Spain as a tax resident – and all that goes out the window.
ISA’s don’t count, everything is taxable. The personal allowance is a lot lower and there’s fewer other income allowances.
And we’re still working through figuring out wealth tax implications. It’s set to zero in this particular area of Spain right now. But we all know how quickly things can change as governments do.
So there would be a pretty major impact on our finances if we lived in Spain for anything more than 182 days each year.
I don’t mind paying tax per se. I’ve probably paid more than the average person in the UK already, courtesy of working in London as a higher-rate tax payer for far too many years.
But it does mean we really have to consider if living in Granada full-time is worth it financially.
Hedging Our Bets?
Like most things in life though, nothing is black or white, all or nothing. There’s always a grey area – or in our case – a potential third way.
We’ve been doing the digital nomad thing a while now. But we still have a lot of other places we plan on travelling to. We’ll also want to spend significant time in the UK visiting family and friends.
It’s not very difficult to see that we won’t actually be in Spain for 365 days a year. Based on our travels to date, it’s likely to be significantly less. Nearer half a year seems more likely for now.
That makes the question about is it worth becoming tax-resident a whole lot more marginal.
Is it really worth all the paperwork, the visa applications, and the actual financial cost to stay those few extra weeks?
Yes, Brexit has screwed up the flexibility with the 90/180 days rule that now applies to us Brits.
But we can still stay up to 180 days a year without changing our UK tax-resident status. It’s just a bit more inconvenient as to when it’s possible.
There’s rarely a perfect answer to any big life question. It’s all about what compromises you are willing and able to accept. In return for something you judge to be worthwhile.
So – are we better off finding a middle ground solution?
There's No Place Like Home
One of the main reasons we even started thinking about living somewhere else is that it’s not easy to find accommodation that works well for long-term stays.
Most places come with their quirks, however much you spend or research them. They’re intended for short stays after all. It’s easy to put up with anything for a short while, but eventually you find yourself missing your home comforts.
Basically, what we’d really like is our own place in Granada. Somewhere we can make to our own tastes, fill with the kind of stuff we like and find useful. Somewhere we’re happy to spend time on a long-term basis.
If we’re not going to be there for large parts of the year, then there’s the possibility of making it work as an investment too. Renting it out short-term.
Especially since Spain assumes you are going to do that anyway – and charges you yet another tax for it!
This is pretty much where our thinking is at now. Can we either buy or build somewhere that would at least wash its face financially for us?
It’s a whole new set of complications to deal with – but it feels like it might be worth working through.
After all – this is exactly how all our previous ‘big adventures’ have started…..!
Hi
Have you looked over the mountains at the costa tropical? Almunecar and Nerja both have a mild climate. There is a mild micro climate for this stretch if the coast. English is widely spoken as franca lingua as there are a lot of retirees from northern europe in this area. Although it can feel like a retirement village sometimes. The hiking and outdoors is literally at your back door from here, if you like hills.
Something to think about. 🙂
Hey, nice to hear from you – especially with tips on Spain 😁. Yep – we’ve stayed in both Nerja and also Frigliana nearby. Enjoyed both – but not as much as Granada. Frigliana was very pretty – but very touristy because of it. Great hiking though – absolutely agree. I think with neither of us caring for a beach that much we’re happier being closer to the Sierra Nevada mountains just outside Granada.
We’re a bit torn on the expat/retiree thing. The language is a plus for sure but yeah, sometimes can be a bit too much.
I have plenty of tips on Spain. My wife is Spanish. 🙂
If you are into hiking then I am assuming you use Wikiloc for finding new trails? If not then look it up and get a free trial. Brilliant in Spain. Not so good in the uk
Awesome – I bet your Spanish is better than ours!
We do use Wikiloc but often as much to record our trail as finding new ones, though the free version is good for both for sure. Spanish footpaths/tracks are pretty well marked – I love the “not this way” coloured-crosses to stop you wandering off the wrong way! La Gomera for example was a total delight to hike – the perfect mix of not getting lost, dry grippy ground, plenty of ‘up’ and views – and still a nice beer along the way 😁.
We used to love hiking in Snowdonia but it’s not as good, usually requiring a car to get to the start, and less well-marked throughout. Still beautiful but once we weren’t limited to holiday time only, it became hard to not just go where we’d be pretty much guaranteed some good hiking days!
The subject is so attractive and I could not restrict to add:
Resident in any EU county, make you taxed on ALL world-wide income. The D.T.T. (double tax treaties) will not help; => A(tax10%) and B(tax 40%), you pay 40% in-total (even tax relief, etc) where ever you reside (A or B).
Some EU counties will consider you resident even if you did not put your feet in the country, as long as you had a “house” at your disposal to live in it (you did not mange to rent it out 183+ days/year).
Mixing the goal of a house is dangerous. Furniture it “high style/cost” for your own living (as I did) and you will be reluctant to rent it out to strangers. Make it “low cost” for renters and you are not comfortable to live in it long term. So is mostly buy-to-let… Or if you live in it, as second house, and is wasted money on primal house… But hey, FIRE can afford this luxury.
In my experience after 70-75 age (body degradation) until 80-90 age (death), a large proportion of population just needs a “room” to look at its ceiling or TV. Second home? – what/where is that, they ask. Yeah, morbid/depressive, I know…
So, maybe you are right to think on 5-10 far way horizon. Or else … it is too complicated.
But, as I like to say/repeat to myself: “Ubi bene, ibi patria!”
Yeah – we spent some time looking at the double tax treaties and quickly realised they weren’t going to help us at all!
The housing point is interesting, I understand what you mean. We’re actually thinking of building something which we can divide into two areas – one rentable, one for us. It increases the cost (double kitchen, stairs etc ) but it does mean we could rent it out when we are there too, if we wanted. All up for debate still right now.
I do totally agree though – there’s a cost to this choice. It’s absolutely not the best financial decision – which is why we’re thinking it through so much. Because you are right – the luxury of FIRE is that not every choice has to be about being the most optimal financial one. It’s about letting us live the life we want, making the most of however much good health we do or don’t get in the big lottery of life.
In my experience so far, as people get older it becomes even more telling about their life attitude. I’ve been fortunate to know people severely health restricted still getting out and making the most of what they can do still. And I know several of the type you mention too.
Those kind of thoughts are a big part of why we’re looking at this at all. We are so much healthier and happier in a country where the climate and culture suits us so much better. For us, there’s not much that ties us to the UK apart from friends and family.
So ‘wasting’ money on something that gives us a better choice on where we choose to spend our time. Yeah, it’s worth something to us for sure. The question is – how much?!
Not trying to influence your decision, but FYI:
1. Useless Spanish agents can sell you a house without proper land permit (then house must be demolished).
2. If you buy a “house”, OLD sewerage pipes are prone to clogging /smell.
2. If gypsies/homeless take over your place (house webcam not working), for more than one month, even the police is useless. Biggest Spanish law trouble!, to evacuate them in 6-12 months and house trashed.
It’s absolutely fine. We appreciate all input from those who have been there, done it. It will all help us to navigate this better if we end up going this way.
And to be honest, you’re not saying anything others haven’t warned us about or that we’ve experienced ourselves. The land thing comes up all the time, some proper horror stories of people getting caught out. It’s quite cool as you can check out individual plots on the local council website which give you a lot of the legal classification to be verified legally obviously.
Ha, yes, plumbing in Spain can be truly awful. We just spent 10 weeks hiking around the Canaries and so many toilets were ‘please don’t fluch anything paper based down me’. Huge problem – and part of the attraction of building our own place to get something decent.
The last point is true for pretty much anywhere, right? We’ve had issues with flats we let out here in the UK. Incredibly frustrating. It is a good reason actually for us to rent rather than leave empty.
Cheers for the thoughts – absolutely appreciated!
I know a variant of this dilemma quite well. Best of luck with figuring it out for you and yours. Will you keep us posted with your cogitations?
Sounds like an interesting story to share there Al-Cam…?!
Thanks – we’ll get there one ay or the other – and I shall do my best to post about it!
Really do not wish to cloud your thinking on this matter. All I will say for now is our story is long-running and on-going and IMO you are correct to note that the UK has a lot going for it – albeit far from perfect!
Sounds a tale for over a pint or two but fair enough! Like the Investor @ Monevator said, we already have a really good life balance what with being outside the UK half the year already. I’m very conscious to not screw it up or add unnecessary stress! We’ll see where our investigations take us….
Most of what would be my key points seem to be coming out via other comments. One thing that might be worth adding is that (like in the UK too) overpaid (IMO) professional assistance is not always entirely reliable. However, in my experience it is much easier to sort this in the UK.
Hi Michelle,
I’ve just discovered your blog following messages we exchanged on David’s “I Retired Young” blog comments section.
I’m really glad I found your blog as just been reading a number of your posts, which are really insightful and informative. I wanted to ask if you’ve got a way to search your blog articles, as couldn’t find a search bar?
I was searching for a more up-to-date version of your annual expenses post called “Was Our Financial Budget Enough Money To Retire On?”, which focussed on 2018/19 & 2019/20 – is there an up-to-date version with 2022/23/24 expenses?
Also have you written about where your sources of income come from, e.g. index funds, buy to let, other forms etc..? If you are able to point me towards these posts I’d really appreciate it :).
My wife Michelle and I are 56 and 54 and plan to Fire in a couple of years. We have two kids (22 & 20) who are at / just finished university, so both still on the payroll hence 2 more years before Fire 🙂
Looking forward to hearing from you and reading more of your articles :).
Best regards,
Ian
Hey Ian.
Nice to hear from you ‘over here’ on my blog. I always enjoy reading what David’s been up to – though he’s way too healthy at times 🤣. It’s a great blog though, I hope he carries on with it.
Hmmm….a search bar eh…..it’s definitely a good idea, I may just take a bit of figuring out on the how…
I haven’t written another blog about expenses since that one but I have still tracked them quarterly. It’s been surprisingly consistent tbh, still well under £40k each year even as we’ve increased our travels again. It’ll be six years of FIRE soon, maybe that’s a good time to do another update?
I don’t remember writing anything much about our investment split but I’ll double-check. I tend not to want to get into specifics such as what fund etc (which Weenie of Quietly Saving does a very nice job of btw if you haven’t found her blog yet ). But yes, something with a high-level split of investment types would be a great idea.
But not until it’s a few rainy days in a row else we’ll be out on the bikes again 🤣
Thanks for taking the time to write – it’s fab to welcome you here. Especially being so close to FIRE yourselves – it was a really exciting time for us in those last couple of years.
Hey Michelle
Great post and interesting to see that your answer to the question of whether you could live at a new location is ‘no’ – what the UK offers is, as well as the tax benefits, the unexciting/boring things which you’ve grown accustomed to and which many take for granted.
It’s funny how while I was reading I was wondering if you would end up buying an investment property in Spain and then I saw your consideration of it! 🙂
Brexit has probably made this more challenging too but certainly not impossible. Am sure you will do all the due diligence, check tax implications etc to see if it would work out. Best of luck with this new adventure and look forward to reading all about it!
Thanks Weenie!
Yes, I don’t think there’s ever a ‘perfect’ answer to anything is there?! It’s all a balance as ever and just deciding what something is worth to you personally.
Funny to hear you guessed the answer before the end 🤣. You probably won’t be surprised to hear that we actually looked at the same idea for South Africa for a while, but Spain ticks a lot more of our boxes despite the language difficulties.
Brexit has definitely made it a harder choice but like you say, everything is possible. It’s just working out how and what’s best.
Thanks – it seems likely we’ll get a few more rainy days yet so you never know, I might just write another post!
Hi, long time following your blog, but first time commenting.
In Spain, even if you live or not in the “house” you pay:
1. “imputed rent”.
2. Then there are fixed cost (for utilities, swimming pool) and maintenance. Ex: my child lives in Barcelona and had to pay for exterior renovation of flats from complex; even if her apartment does not need to be refurbished.
But for me, the big challenge will be, not now but in future, with language when possible brain degradation. A hassle to agree with doctors, lawyers, police, etc.
And last but not least, climate change. Now i like 22-30 gr.C, it was OK even in August at 42 gr.C on the beach. But a permanent increase in temperature, when I will be older is not OK to breath.
As a British and EU citizen is a pain in the back with UK tax optimized not been reciprocated in Europe. IMHO, using my “die with zero” concept, the 1,000 eur/month wasted on rent for 3-4 month in UE, is worth instead of buying a house of 300,000 eur. Because living in that house for 1/4 time (visiting 3 countries/year), means my gold “cage”/house is worth only 300K/3=100K as used; So for next 10-15 years is just like pay rent instead of mortgage. I will not take the assets/house in the heaven. But is freedom to fly when shit hit the fan (tax/war/climate).
Hi John. That’s so good to hear you are a long time follower – and even better to hear from you 😁.
On (1) – yes, we were very shocked on finding that one out a few months back. It’s partly why we decided if we do go for this we’d want it to be rentable too.
On (2) – agreed. We’re leaning towards places not in a complex for that reason. Much as owning a leasehold here can leave you at the whims of freeholders and management companies ( another story, another time….!) it seems no different in Spain and we’re keen to ensure we can control costs as much as possible.
One of the reasons we like Granada in particular is that it’s at a pretty high elevation, about 700m. So it suffers far less from the summer temperatures. It even has a ski resort in winter!
But agreed – everything changes over time. Personally, I’ve come to learn it’s best to only think about what’s best for the next 5 – 10 years. Beyond that, the world (and me) can change so much. So long as we ensure we have something that will see again, we can always change our minds later if we don’t ike how it’s working out.
Thanks for taking the time to comment all this – really helpful.