Researching the subject of “second home” in relation to American expats reveals that a “second home” is any home that is outside of America. Costa Rica is said to be the most popular place for Americans to retire to their “second home“. South-East Asian countries are seeing foreign retirees as “second home” purchasers. Spain is considered as being one of the most popular places in Europe for a “second home”. All of this gives one the impression that the a “second home” for Americans is any home that is not in America.
Yet, if an American living abroad seeks to buy their one and only single-family home in America, they are told that such is a “second home” or even an “investment property”. With citizenship-based taxation on world-wide income, isn’t the one and only American home in America of an American their “first home”? I would think so, but I’m told not.
I’m currently in the process of attempting to get a mortgage for my one and only single-family home in America as a “second home” and the entire effort is being threatened with a total collapse. The problem is that the building insurance will only recognize it as being an “investment property”. No problem, one would think, but this means that the American home of an American cannot be financed as a “second home” since it is insured as an “investment property”. I explained that I might visit the property every now and then or even retire to it eventually. Nope, that’s an “investment property” because it will be rented out, I was told by the building insurance. I explained to them that I could leave the property unoccupied and live in it whenever I visited the area. Yet, then it won’t be insured and if it’s not insured then it cannot be financed.
I thought that I was doing a good thing. I wanted to invest my tiny American inheritance into America by getting a mortgage to help the troubled housing market and I fought my way past all the puzzling hindrances all the way to closing, such as foreign address issues, language issues, currency issues, tax issues, etc., only to learn that it might not close because my American home is a first or secondary home investment property conflict doomed for failure, thanks to the building insurance which states that “it’s the law”.
If that wasn’t bad enough, banks in Switzerland are telling me that they won’t finance my “second home” in Switzerland for the sole reason that I’m considered to be a “US person”. Never mind my high credit ratings in the US and Switzerland. Never mind that I have no criminal record in the US or Europe or anywhere else. Never mind my qualifying income. Never mind that I was honorably discharged from the US military. Never mind the current inability to purchase a first or second home in America without it being defined as an “investment property”. So, what now with one day left to go?
Well, following the advice of the lender, I went to another agency and answered the questions asked without volunteering any additional information, receiving the HO-3 Policy required to purchase a “second home”. The price is the same and the conditions are pretty much the same, with the only difference being that the property insurance meets the requirements of the loan without the “abroad” identity being identified.