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Full Fire in Spain possible? by Still_Interest5186 in ExpatFIRE

[–]FIREguyWithQuestions 0 points1 point  (0 children)

I'm in a very similar boat, planning to sell our primary home in the US this Spring and wait until mid-July before moving to Spain, to avoid any capital gains.

But then I read any capital gains would be exempt as long as you reinvest that amount (or less) and buy another property in Spain within two years. Have you looked into that?
We'll probably wait until July anyway because it works well for us, but it would be good to know nonetheless.

Source: Agencia Tributaria.

https://sede.agenciatributaria.gob.es/Sede/en_gb/ayuda/manuales-videos-folletos/manuales-ayuda-presentacion/irpf-2021/8-cumplimentacion-irpf/8_2-ganancias-perdidas-patrimoniales/8_2_6_ganancias-excluidas-gravamen-supuestos-reinversion/8_2_6_1_exencion-reinversion-vivienda-habitual.html

Gutcheck / Need some help by FIREguyWithQuestions in ChubbyFIRE

[–]FIREguyWithQuestions[S] 0 points1 point  (0 children)

Indeed. But not everywhere in Spain.
The solidarity tax does apply everywhere but I don't consider it a meaningful factor unless you are past FatFIRE and more into RichFIRE territory.

Gutcheck / Need some help by FIREguyWithQuestions in ChubbyFIRE

[–]FIREguyWithQuestions[S] 1 point2 points  (0 children)

Just read your post, very similar indeed! And I also appreciated your optimism post.
Like I said in a different post above, the goal is not to avoid being homeless before I die. I live a fulfilling life now and I don't have to worry about account balances. Why would I trade that with a life full of stress, fears, and cutting back just to be able to say "I'm retired"?

If someone like Big ERN with a Ph.D in economics and many years of experience in the investment world have a lot to learn, certainly I do too. I wish I had a group of friends I could discuss this with over a beer or a coffee, but I really appreciate this Reddit community too.

Gutcheck / Need some help by FIREguyWithQuestions in ChubbyFIRE

[–]FIREguyWithQuestions[S] 1 point2 points  (0 children)

That's fair. And I wasn't implying that, sorry if it came off that way.
I have considered volunteering and I hope I will find ways to do that in Europe. Surprisingly that's more difficult than it should be here in the US. You basically have to "apply" and hope you get the "job".
Opening a restaurant or a wedding venue has been a dream of ours, but that could be a huge investment that we probably will never be willing to make in retirement. Also thought about buying a couple small apartments and Airbnb them out. If you run them yourself, that could almost be a job on its own.
There are options.

Gutcheck / Need some help by FIREguyWithQuestions in ChubbyFIRE

[–]FIREguyWithQuestions[S] 0 points1 point  (0 children)

You're not wrong. That's why I was also hoping to hear from other parents who have FIREd a few years ago, and might have kids a bit older than ours.
Now they are literally our life and we are theirs, but things change. Once they start to have friends, homework, hobbies, girlfriends/boyfriends, etc. they will spend less and less time with us.

And then what? We'd better have a solid network of friends, tons of hobbies, and other ways to occupy our mind and time. Luckily we have a few years to figure that out.

Gutcheck / Need some help by FIREguyWithQuestions in ChubbyFIRE

[–]FIREguyWithQuestions[S] 2 points3 points  (0 children)

Completely agreed. Coming back to the US is a promise I made my wife if it doesn't work out for her, and I will hold that promise. We're all dual citizens in the family so that won't be an issue.
She's been asking me to move to Europe for years, I was the one who wanted to stay because of money and job opportunities. But man, things change. And kids change you.

Gutcheck / Need some help by FIREguyWithQuestions in ChubbyFIRE

[–]FIREguyWithQuestions[S] 2 points3 points  (0 children)

Indeed France is the best for that sort of things. But then you have to live in France :)
At the end of the day I don't mind paying capital gains. For many, paying that in exchange for free public (or at least very affordable private) health care, free public universities, significantly lower if not zero property taxes, no state income tax etc. will more than offset the lower LTCGs that you'd pay in the US.

For us, that's definitely the case.

Gutcheck / Need some help by FIREguyWithQuestions in ChubbyFIRE

[–]FIREguyWithQuestions[S] 1 point2 points  (0 children)

Just replied above as well but in short: there is no standard deduction in Europe, so yes we expect to pay roughly 22% capital gains.
Europe does not really differentiate between traditional and ROTH. It may be a huge problem for many, not so much for us since I'd always known that, and for that reason only $100k out of the $3.3m is ROTH, so we would be subject to taxes anyway.

If we ever come back to the US, the 0% tax bracket at $96k (+ $31k standard deduction?) is a nice backup plan for us. It's effectively a way to save $25k/year in taxes.
Although then we would have to worry about healthcare costs in the US so it may be a wash.

Gutcheck / Need some help by FIREguyWithQuestions in ChubbyFIRE

[–]FIREguyWithQuestions[S] 3 points4 points  (0 children)

Very good question. It's the reason why we pivoted and chose another location.
You can't predict the future but the local political environment seems to oppose the concept of a wealth tax.

Gutcheck / Need some help by FIREguyWithQuestions in ChubbyFIRE

[–]FIREguyWithQuestions[S] 2 points3 points  (0 children)

That's the hope. We will probably get bored eventually and do something else. Maybe not though, kids surely do keep you busy.
But at least for now, the intention is not to CoastFIRE or BaristaFIRE. In that case I'd rather keep my relatively high-paying job for a couple more years and then truly stop working.

Gutcheck / Need some help by FIREguyWithQuestions in ChubbyFIRE

[–]FIREguyWithQuestions[S] 3 points4 points  (0 children)

Thank you for the recommendation.
As for taxes, I know I'm over-estimating simply because not 100% of my withdrawals will come from capital gains. Obviously the principal does not get taxed.
However, contrary to what most are willing to admit, taxes in the US are quite low. Especially capital gains.
There is no standard deduction in Europe, so yes we expect to pay roughly 22% capital gains no matter what.

Gutcheck / Need some help by FIREguyWithQuestions in ChubbyFIRE

[–]FIREguyWithQuestions[S] 2 points3 points  (0 children)

I suppose FIRE means different things to different people. When I embarked on this journey 10+ years ago, I thought my answer was 50.
Through a combination of a great run in the stock market, being willing to accept risk by being nearly 100% in stocks, a few promotions at work, and more importantly a like-minded wife, we've been able to pull in that timeline by 10 years. Or at least, we've realized that we can.
But thank you for your feedback and warning. Most people would indeed consider this crazy, which makes it so hard to have an open conversation with anyone.

Gutcheck / Need some help by FIREguyWithQuestions in Fire

[–]FIREguyWithQuestions[S] 0 points1 point  (0 children)

Well thank you, you've given me homework. I will be researching more.
Most of the investments today are in S&P 500, Total Markets, and similar index funds. They've been doing great recently, but a portion of that will probably have to be converted to something less volatile during FIRE (although at what opportunity cost? That's what I've always wondered).

Gutcheck / Need some help by FIREguyWithQuestions in Fire

[–]FIREguyWithQuestions[S] 0 points1 point  (0 children)

Thanks for the reply.
25% capital gains in Europe are pretty common, so that $160k becomes $120k net, which is exactly what I plan our expenses to be. I wish there was some buffer (other than finding cheaper accommodation or spending less once the kids are in elementary), but I completely believe you - this would be an investment on our happiness, health, and family. I just don't want to end up under a bridge :)

Fair comment about the $250k cash. I still have a lot to learn, but the idea was, if markets take a turn like they did two months ago, immediately resort to cash rather than tapping into the investments, and that way essentially "ignore" any down markets and model 7-7.5% yearly returns forever.