Should Fleeing Americans Keep Their House in the States?

The number of Americans moving abroad is on the rise. Their motives are as varied as their destinations, but many share a similar dilemma: Should they sell their house in the states or keep it?

“For many expats, owning a home in the U.S. while you live overseas can be a great idea, perhaps even profitable,” says Graham Hill, a real estate adviser at Find Osaka Agents, an agency dedicated to helping expats find local agents in Japan. 

But keeping your home stateside can add management headaches, tax complications, and a general sense of being pulled between two worlds. Still, for many, the hassle is worth it.

Why Americans are leaving

The trend of moving abroad has come into focus as a swath of celebrities quit the U.S. after the second inauguration of Donald Trump. But the movement has been gaining momentum for years, as inflation, rising health care, and housing costs have put pressure on families' income.

“In the past five years, we have had hundreds of clients move to Mexico,” says Mariana Lange, founder of Mexico Relocation Guide. “Many of them were motivated by the lower cost of living in Mexico, or they were looking for a better quality of life or a new adventure.”

The movement has been especially strong among retirees, who are looking to capitalize on the $84 trillion in real estate wealth they’ve accumulated while living on a fixed income. 

Additionally, flexible work policies have enabled an entire generation of workers to maximize their incomes while living in the most affordable places.

Pros of keeping your U.S. house

If you own a home in the U.S., you may want to hang on to your property to generate passive income and maintain a sense of connection with your home country. Here are some of the top benefits of doing so:

Investment

Many expats turn their U.S. home into an investment property by renting it out while living abroad. For those who are able to successfully manage this arrangement, the benefits can be huge.

“Depending on the cost of living where you move, the profit from the rent you collect on your U.S. property—even after paying a mortgage and property tax—might more than cover your rent in the new country,” says Hill.

Likewise, depending on local regulations, you might not have the same freedom to reinvest in property in your new home. For example, look no further than our northern neighbor.

“Canada has been the target destination of many Americans looking to relocate,” says Baron Alloway, the broker of record at Alloway Property Group in Toronto.

“Canada currently has a foreign buyers ban in place until 2027. The ban applies to anyone who is not a Canadian citizen or permanent resident of Canada," including corporations and partnerships.

The lack of investment opportunities abroad can be an added incentive for homeowners retaining their property in the United States.

Safety net

For Stephanie Stone-Robb, real estate expert at Expatsi, an agency that helps Americans move abroad, the advantage of keeping your house stateside is much simpler:

“The most common reason [expats] keep their home is to have a 'home base' for when they return to the U.S., whether it be for a temporary stay or they return permanently,” she says. “Homeowners who bought when rates were 2% to 3% a few years ago are hesitant to sell if they know they'd be looking at 6% rates if they wanted to buy in the U.S. again.” 

Hill adds that this safety net can be especially beneficial as expats seek to establish residency abroad.

“Depending on your immigration status, it could take years to become a permanent resident in the new country,” he says. “If you retain ownership of your home in the U.S., you can create rental income, continue to use the home as a tax write-off, and benefit from real estate appreciation.”

Emotional ties

Many people underestimate their ties to their home country when moving abroad, but keeping their house can provide an anchor that gives them the stability to establish a new life overseas.

“I have seen people sell all their belongings because they truly didn't take the time to test out a country before making the real commitment. And when they have extreme culture shock, or they miss their families too much and have to move back, sometimes it is very taxing on their savings,” says Lange. 

“Vacationing somewhere isn't like living there full time. So it's a good idea to hold on to their homes and some of their things while they are testing a new country if they can afford to,” she adds.

Cons of keeping your U.S. house

But keeping your house in the States isn’t without complications. Those who do will need to deal with property management logistics, tax implications, and a fluctuating real estate market.

Management headaches

Lange gets to the heart of the matter: “One of the biggest challenges of managing a property from abroad is maintenance or tenants.”

She speaks from experience. When she and her husband lived in Panama, they rented out their house in Austin, TX, to a young couple who accidentally flooded the place. Luckily, she says, they had a property manager who took care of everything, including contacting a water mitigation company and handling the contractors who replaced their damaged floors.

Both she and Hill recommend finding a reputable property manager you can entrust your home with while you’re abroad. While they will take a small share of your rental income (Lange paid her manager 8%), they will be invaluable in the peace of mind they offer.

Tax complications

While this passive income might be necessary for some, for others, it can be more work than it’s worth.

“Income earned from your rental home is taxable income,” says Stone-Robb. This can create an ordeal for some expats, as they navigate their tax burden in the U.S. and abroad. Many countries will charge an income tax on this income, forcing some expats to pay double taxation.

“Talk with a tax professional not only in the U.S. but in the country you are moving to to find out about tax obligations on rental income,” she recommends.

Changing markets

The U.S. real estate market is fluid. The past five years alone are proof enough of how fast rapid growth can turn to stagnation. Expats might not want the responsibility of keeping track of the ever-changing sturm und drang of American home values and mortgage rates while living somewhere else.

Final verdict: It depends

As with most things in real estate, the decision to keep your home in the U.S. or sell depends on your unique circumstances. For expats testing the waters, it’s likely worth it to hang on to your U.S. home for an added safety net, while you establish residency in your new country and make sure it’s the right fit. For those who are established and don’t want to deal with managing their property, the tax implications, or the dynamics of the real estate market, selling may be the best bet.