Financial advisor Meredith Tabbone never anticipated that delving into her family’s Italian background would result in a life-altering choice. In her research on her Sicilian ancestry, she stumbled upon the enchanting village of Sambuca di Sicilia, which was marketing an abandoned property through an auction with starting bids as low as one euro.
It was an experience too alluring to overlook.
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Tabbone made a bid without even seeing what she was bidding on, but she got lucky and ended up winning.
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However, her £1 dream turned out to be a wake-up call. A bidding war drove the final price of the property up to $6,200. Once the house was officially hers, the real challenge started: turning the “dire at best” property into a habitable space.
The Hidden Expenses of a Move
When considering a move, many people focus on the obvious costs such as hiring professional movers, renting a moving truck, and packing supplies. However, actual expenses can be much higher.
More and more people are choosing to move to cities with lower housing costs, since rapidly increasing housing costs in the U.S. are making it difficult for many to afford homes.
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The Italian property was initially being sold for just one euro, but the real cost of Tabbone’s Sicilian dream was much higher than she anticipated. Initially, she had planned to spend around $40,000 to make the house habitable. However, after purchasing the property, she also bought the neighboring house for approximately $23,000 in order to expand her living space. In the end, she spent a total of $446,000 on renovations over the course of three years.
Living in Chicago, Tabbone initially underestimated the challenges and costs of renovation, given her lack of experience.
It can be quite costly to go back and forth, especially when it comes to traveling,” she informed CNBC Make It. “If I had to pick, I’d say my contractor was the costliest aspect, with flying being a close second.
Considering the financial challenges and logistical difficulties that Tabbone faced, her story highlights the often unforeseen expenses that can come with buying a property abroad, which can sometimes greatly exceed the initial asking price.
Cost of living in the United States is spiraling out of control —
Was it worth it?
For Tabbone, purchasing properties in Italy wasn’t just a matter of making a financial transaction – it was also a way for her to reconnect with her Italian roots. However, considering she was looking to escape the high cost of living in the U.S., whether or not this was the smartest financial decision is not immediately obvious.
Tabbone credits herself for being in a singular position.
I’m lucky that I didn’t have to tap into my savings, given how long this renovation took,” she said to CNBC Make It. “Instead, I was able to pay the bills as they arrived, since the project has been ongoing.
For many Americans, making this type of move might require tapping into savings or retirement accounts – which could put their long-term financial security at risk.
The excitement of relocating to a foreign country often eclipses the day-to-day expenses. Beyond the initial investment of purchasing a home, ongoing costs such as maintaining the property, paying property taxes, and purchasing home insurance can be a significant burden.
Living abroad also involves navigating complex visa and residency requirements. For instance, tax implications pose a significant challenge, as U.S. citizens remain subject to U.S. federal tax laws wherever they reside. Consequently, residents typically must still file U.S. taxes on their global earnings.
If you are a U.S. citizen or a resident of the United States, you are typically required to pay U.S. income tax on all your worldwide income, whether you’re living inside or outside of the country.
Another important factor to consider is access to healthcare. Although some countries have lower healthcare costs, non-resident individuals may still encounter limitations or require supplementary coverage, thereby increasing their total expenses.
Whether owning a second property abroad is worth it depends on your individual situation. For some, renting out their property might be a more sensible and cost-effective alternative to buying a second home. Ultimately, it’s essential to consider your financial situation and priorities before making a decision.
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This article is for informational purposes only, and you should not consider it as definitive advice. It is provided without any implied or explicit guarantee of any kind.
