Wealthy individuals are leading the trend of Americans buying properties outside the United States, but they are not alone. Americans with average incomes, especially people who work remotely and retirees, are exploring overseas real estate markets in places such as Costa Rica, Panama, and Portugal in search of a better quality of life and a bigger bang for their buck.
However, living abroad is very different from spending a few weeks there. In addition to the challenges of adapting to a foreign culture, prospective buyers must be aware of the financial, legal, and tax implications of buying real estate abroad before signing the dotted line.
Finding the American Dream Outside America
Some US citizens are looking abroad in search of a better lifestyle at a reduced cost. About 5.5 million Americans currently live overseas, and more may be looking to make the move in search of an American dream that is eluding them in America.[1]
A 2024 Coldwell Banker report found that, amid surging US home costs and the rising cost of living, 40 percent of US consumers with household income of over $1 million planned on buying a home overseas over the next 12 months, while two-thirds planned to purchase a home abroad in the next five years.[2] Also, according to a recent Harris Poll, 4 in 10 Americans have at least considered moving or plan to move abroad.[3]
The average US household’s monthly expenses are now up to nearly $6,500,[4] while in a country such as Belize, it is possible to live comfortably on about $2,000 per month.[5] Healthcare also tends to be cheaper overseas. Costa Rica, for example, provides high-quality medical care at a significantly lower cost than in the US; hospital visits in Costa Rica typically cost about half as much as they do in the US.[6]
No matter how much they earn, Americans from different backgrounds and income levels typically want the same things: success, prosperity, good health, and upward mobility (and perhaps, a bit of room to spread their wings—preferably somewhere warm).
Navigating Uncharted (Legal) Territory
With international travel faster and more comfortable than ever, and remote work unshackling us from the office and a fixed address, Americans of all ages and economic stripes are entering the international real estate market as investors, retirees, digital nomads, and lifestyle seekers.
While the romantic appeal of a new life in a different country is undeniable, the practical realities—including the legal, financial, and estate planning considerations of foreign real estate ownership—can convince even the most idealistic modern pilgrim that the move is not just a permanent vacation.
Prospective buyers who are braced for culture shock may not be prepared to navigate the legal framework of their chosen destination, where issues such as mortgages, taxes, and property and inheritance laws can differ significantly from those in the US. For example, some countries restrict foreign ownership, impose specific registration requirements, or limit how property can be used or transferred.
The following are some of the issues you may have to navigate as a nonresident buyer:
Tax Responsibilities
Owning foreign real estate usually triggers tax obligations in both the US and the foreign country. As a US citizen, your worldwide assets, including foreign real property, are subject to US estate tax. Profits from selling foreign real property are generally subject to US capital gains tax, but exclusions may apply if it was your primary residence.
You could also be subject to local property taxes, income taxes on rental income, and capital gains taxes in the foreign country, in addition to less-known local taxes, such as Portugal’s annual wealth tax (called AIMI) on high-value properties; Spain’s deemed rental income tax even if the home is vacant; and Thailand’s Specific Business Tax (SBT) on the sale of property sold within five years of purchase (unless the property is used as a personal residence).
When buying property abroad, you may need to file US tax forms such as the FBAR (FinCEN Form 114, Form 5471, or Form 8858)—but only if you hold the property through a foreign entity, have foreign bank accounts tied to the property, or operate it as a foreign branch. These forms may not be required if the property is owned in your name with no foreign financial accounts.
To avoid double taxation, you may be able to claim a foreign tax credit on your US return for taxes paid to the country where the property is located. If you eventually sell the property and pay capital gains tax abroad, this credit may help offset your US tax liability.
US Estate Plans
Estate plans in the US, including wills or trusts, may not seamlessly govern foreign real estate. Many jurisdictions reject US wills if they do not meet local formalities (e.g., notarization, language requirements, or specific witnessing protocols). If a will is deemed invalid under foreign law, the property may be distributed under that country’s intestacy rules, which can contradict your intended wishes.
Trusts pose further hurdles. Civil law countries—including Italy, Chile, and Portugal—often do not recognize the concept of a trust as it exists under US law. This means that even a properly drafted US trust may be ignored or deemed legally ineffective for handling real estate abroad. In Portugal, for example, long-standing ambiguity around the recognition of trusts has caused complications for foreign owners relying solely on US planning tools.
One potential workaround is to execute an international will under the 1973 Washington Convention on International Wills. This treaty provides a standardized format for wills intended to be recognized across multiple countries. An international will must be in writing, signed by the testator in the presence of two witnesses and an authorized person (such as a notary), and properly attested.
The validity of an international will under this convention depends on whether the relevant countries have signed the treaty and whether their local laws allow for the intended distribution of assets. While the federal government has not ratified the treaty, many states, including California, Illinois, and New York, have enacted the Uniform International Wills Act, allowing residents in those jurisdictions to create wills intended to be internationally valid under the convention.
Forced Heirship and Inheritance Rules
Countries with forced heirship rules can also disrupt US-based estate plans. These inheritance rules stipulate that family members, typically spouses and children, are legally entitled to inherit a predetermined portion of the deceased’s estate, regardless of what is stated in their will or trust.
In Germany, for example, Pflichtteil (forced share) entitles spouses, children, and, in some cases, parents to 50 percent of what they would have received under intestate succession. Brazil, Portugal, Italy, and Mexico (depending on applicable local law) enforce similar inheritance rules.
If forced heirship is a concern for foreign homebuyers, they may consider purchasing property in jurisdictions without forced heirship laws, such as the UK, Ireland, or certain Caribbean islands, where the legal framework aligns more closely with US estate planning principles and allows for greater flexibility in directing how assets are distributed.
Dual Counsel for Expat Buyers
Perusing overseas real estate listings can have your head spinning at the possibilities. But foreign buyers who do not know the local laws—and do not work with an attorney at home and in the country where the property is located—could face dizzying complications.
To avoid costly mistakes that could put your investment—and your legacy—at risk, engage counsel from both jurisdictions who can help you with cross-border planning issues to align foreign and domestic requirements. If you are looking to plan for property you own in a foreign country, call us.
[1] Doris L. Speer, How Many Americans Live Abroad?, AARO (Oct. 2024), https://www.aaro.org/living-abroad/how-many-americans-live-abroad.
[2] The Trend Report, p. 59, ISSUU (Jan. 13, 2024), https://issuu.com/thereportgroup/docs/cbgl_-_the_trend_report_2024_4f0b3bedd1e4ff.
[3] Grace Snelling, More Americans want to leave the country and live overseas. Many say cost of living is the top reason why, Fast Company (Mar. 4, 2025),
https://www.fastcompany.com/91289388/more-americans-want-leave-country-live-abroad-cost-of-living.
[4] Jack Caporal, American Households’ Average Monthly Expenses: $6,400, Motley Fool Money (Feb. 14, 2025),
https://www.fool.com/money/research/average-monthly-expenses.
[5] Gabriela Peratello, Cost of Living in Belize: your 2021 guide, Wise (July 13, 2021),
https://wise.com/us/blog/cost-of-living-in-belize.
[6] Christy Lowry, The cost of living in Costa Rica vs the U.S., Western Union (June 4, 2024),
https://www.westernunion.com/blog/en/us/the-cost-of-living-in-costa-rica-vs-the-united-states.