The Seven Questions: A Decision Framework for Leaving America

“Where should I move?” is a profoundly complex question.

In a sense, it’s a lot like “which stocks should I buy,” which is a question I answer for a living. Only my version is arguably simpler: I only have about 7,000 public companies to choose between, but somebody seeking a new home outside the US is selecting from about 42,715 cities according to the Simplemaps dataset.

Subtracting options from the list is the best way to simplify your search process. Our investment process does that work at Ethical Capital every day. I hope the seven questions below offer you the same kind of clarity.

1. Do I want to own property — and can I?

This is the hardest constraint if ownership matters to you. Many countries allow indefinite renting or condo ownership, but genuine freehold land ownership is rarer than most people assume.

Does ownership actually matter to you?

Renting indefinitely is a legitimate strategy, and in many cases it’s the better one.

Renting preserves flexibility, avoids transaction costs, eliminates property management headaches, and keeps your money liquid.

The case for owning is strongest when you want the psychological anchor of a permanent home. Buying proves cheaper than renting over 10+ years, especially in low-turnover markets. If you’ve spent enough time somewhere to be confident you’re staying, it can make a lot of sense.

The case for renting is strongest when you’re not sure you’ll stay longer than 3–5 years, because the costs of buying and selling a home are substantial.

If you’re a committed renter, skip to Question 2.

Three tiers of ownership:

• Freehold — Own land and structure outright, in your own name, in perpetuity. Examples: Colombia, Georgia, Uruguay, Mexico (interior), Portugal, Panama.

• Restricted freehold — Can own, but through trusts, with minimum price floors, or with geographic limits. Examples: Mexico coast (fideicomiso), Malaysia (state minimums, typically RM 1M+).

• No land ownership — Leasehold, condo-only, or nominee structures. Examples: Thailand (condo only, 30-yr lease), Vietnam (50-yr leasehold), Cambodia (above ground floor only), Sri Lanka (99-yr leasehold).

2. How will the move affect my tax bill?

62% of Americans living abroad paid no American taxes from 2016–2021 according to the IRS Taxpayer Advocate.

But you’ll still have to file your tax returns, and they are likely to get quite a bit more complex.

There are two primary tools in the American expat’s arsenal for reducing their tax bill: the Foreign Earned Income Exclusion and the Foreign Tax Credit. Generally, you can only use one at a time.

The Foreign Earned Income Exclusion shields $132,900 of income from US taxation, which can serve as a significant tailwind for folks earning W-2 income from foreign soil. It’s particularly useful in low-tax jurisdictions where minimizing American tax is the primary concern.

The Foreign Tax Credit is your primary tool if you’re in a high-tax country. Taxes paid to a foreign government reduce your US tax liability dollar-for-dollar, up to the US tax on that income.

Neither of these exempt you from self-employment tax unless you’re living in a country with a totalization agreement, so you may be subject to 15.3% taxes even if you are also compelled to pay into your local system.

Don’t forget state taxes

Moving abroad does not automatically end your state tax obligations.

If you’re leaving the US from a state with income tax, that state may continue to claim you are a tax resident after you leave.

“Sticky states” aggressively enforce domicile rules. California, New York, Virginia, South Carolina, and New Mexico assess domicile via a “closest connections” test — not merely day-counting. Retaining a driver’s license, voter registration, bank accounts, professional licenses, or real estate gives these states grounds to continue taxing your worldwide income indefinitely.

• California (13.3% top rate) offers a 546-day Safe Harbor requiring uninterrupted absence — but only under an employment contract. Passive retirement does not qualify. Return visits cannot exceed 45 days/year. Intangible income (dividends, interest) cannot exceed $200,000 annually.
• New York enforces a 548-day foreign safe harbor requiring 450 days in foreign countries during that window, with return visits capped at 90 days.

To mitigate this, establish domicile in a state without income tax — including new licenses and voter registration — before moving internationally. Use a virtual mailbox in a non-tax state for ongoing US correspondence.

This general advice is where our expertise ends. It’s well worth your time to consult a qualified tax professional about your specific situation.

A sidenote on banking and investment accounts

Opening international investment or banking accounts in host countries is not typically a smooth experience for American citizens.

Foreign mutual funds in particular can trigger punitive US taxation. This is self-interested advice (Ethical Capital is a US-based investment adviser) but you should maintain US-based investment accounts instead of opening them in the host country.

This is almost always true, unless:

• You live abroad permanently,
• You get “free money” in a foreign pension,
• US brokerages force you out,
• You are investing in foreign real estate or private equity, or
• You are married to a non-resident alien.

Even a local bank account can be complex. Banks that fail to properly identify an American account holder and report their assets to the IRS face a 30% withholding tax on all their US-sourced income under FATCA. Many foreign banks simply do not accept American clients as a result.

Best practice: Maintain a US-based account (Schwab and Fidelity both offer accounts with no foreign transaction fees and ATM rebates, and the State Department Federal Credit Union is available with a $15 lifetime membership to the American Consumer Council) alongside a local account for in-country expenses.

3. Will the destination country also tax me?

The five tax systems each affect passive-income expats and active earners very differently. Which one applies to your situation depends less on where you live and more on where your income comes from.

If you’re living on US-sourced income (Social Security, pensions, investment distributions, rental income from US property), territorial taxation is the highest-value outcome — it means zero interaction with a second tax authority on that income stream. A territorial country will simply ignore money you earned in America.

If you’re earning locally (remote work paid by a foreign entity, freelancing for international clients, or running a local business), treaty protection and totalization agreements matter much more. A worldwide tax system with a US treaty means your taxes are coordinated rather than stacked. A worldwide system with no treaty means you’re filing in two jurisdictions, paying in both, and recouping what you can through the Foreign Tax Credit — manageable but complex, and you’re still on the hook for both countries’ social security systems unless a totalization agreement covers you.

Five systems, each with different implications:

• Territorial — Country taxes only locally-sourced income. Your Social Security, US pensions, and US investment distributions face zero local tax. Destinations: Panama, Malaysia.
• Territorial with caveats — Nominally territorial with important qualifications. Destinations: Georgia (exempts most foreign income; no US tax treaty), Uruguay (tax holiday terms changed dramatically in 2026).
• Worldwide with treaty — Country taxes worldwide income, but a US tax treaty provides coordination. Destinations: Portugal, Mexico.
• Worldwide, evolving — Tax reform in progress; rules may change. Destinations: Thailand (2024 reforms tax remitted foreign income; enforcement unclear as of early 2026).
• Worldwide, no treaty — Country taxes worldwide income; no treaty to coordinate. Foreign Tax Credit still applies. Destinations: Colombia, Vietnam, Cambodia, Sri Lanka.

For passive-income households, territorial taxation is more valuable than a tax treaty. A territorial system means zero interaction with a second tax authority on Social Security, US pensions, or US investment distributions.

For earners and remote workers, evaluate treaty protection and local income tax rates before choosing a destination. The difference between Portugal (worldwide with treaty) and Colombia (worldwide, no treaty) may be manageable on paper — but the Colombia filing burden is real.

Totalization agreements (preventing double Social Security taxation on earned income) exist with two destinations on this list: Portugal and Uruguay. An American opening a local business or doing taxable local work anywhere else owes contributions to the local social security system with no reciprocal US benefit, while remaining liable for US self-employment taxes.

Budget $500–$2,000/year for a local accountant in any destination, even territorial-tax countries.

4. Am I safe there?

Political stability and anti-expat risk

• Most stable: Portugal, Uruguay, Panama — though not equivalently. Portugal ranks 7th globally on the Global Peace Index (2024); Uruguay ranks 52nd; Panama 96th. All three lead the other destinations on this list by a meaningful margin.
• Stable with caveats: Mexico (location-dependent), Colombia (urban centers safe, rural areas less so), Georgia (stable governance but Russia tensions and foreign agent law controversy), Malaysia (stable democracy with periodic turbulence), Thailand (multiple coups since 2006).
• Elevated risk: Sri Lanka (2022 sovereign default, IMF restructuring), Vietnam/Cambodia (stable authoritarian governance but weak rule of law for foreigners).

Anti-expat backlash is a growing risk. See The Other Side of the Ledger for detailed dynamics by destination. The trend line matters more than the current snapshot.

Healthcare access

Medicare provides no routine international coverage. You need:

• Private international health insurance ($200–$700/month for 65+)
• Access to quality local facilities for routine and emergency care
• Medical evacuation coverage for complex procedures

Medicare Part B “Road Back” penalty: If you drop Part B while abroad to save on premiums and later return to the US, your monthly premium increases permanently by 10% for every full 12-month period you were eligible but unenrolled.

Re-enrollment is restricted to the General Enrollment Period (January–March), with coverage starting the following month — leaving a potential coverage gap during a health-vulnerable return. Many expats keep Part B precisely to avoid this permanent penalty.

JCI accreditation tells you about hospital systems and safety processes. It does not tell you about specialty availability, provider depth, or what happens when you need memory care at 80+.

5. Can I afford it — and could that change?

In many cases, the countries on this list have a structurally weaker currency than the US dollar.

And as a value-oriented investment firm, we built this list to focus on countries that offer significant cost of living benefits relative to the United States. In the best case, folks who expatriate to these countries keep their assets in dollars, keep their investment income in dollars, and live in a place where the local currency gets weaker every year relative to the dollar.

But that never happens in a straight line, and it’s never guaranteed. The real question is currency risk — and the related but distinct question of local inflation.

• Currency risk: The local currency moves against the dollar, changing your purchasing power overnight.
• Local inflation: Local prices rise even if the exchange rate holds.
• Both can happen simultaneously. Sri Lanka experienced currency devaluation AND high local inflation in 2022.

Local currencies exist along a spectrum of volatility:

• Zero: Panama (USD).
• Low: Mexico (peso resilient 2020–2025), Uruguay (heavily dollarized for large transactions), Thailand (baht managed within IMF Article IV bands), Malaysia (ringgit managed float).
• Moderate: Vietnam (gradual controlled depreciation ~2–3%/yr against USD), Portugal/EUR (subject to ECB policy; Lisbon rental inflation 15–25% in 2022–2024).
• High: Colombia (50%+ depreciation since 2020), Sri Lanka (45% collapse in 2022, partially recovered).

Currency risk can be hedged, but those hedges are priced on the underlying volatility of the currency — and maintaining a hedge adds both cost and ongoing management complexity.

Capital controls matter too. Research repatriation rules before committing capital. In Vietnam, profit repatriation is tightly controlled by the State Bank — funds can generally only be transferred offshore once per year, following audited financials and settlement of all tax obligations.

6. How easily can I get back to the US?

Over the long term, events like a family emergency, a medical need, or a bad week are inevitable. It’s worth making sure that the flight home is manageable if that’s important to you.

• Same time zone, 3–5 hours: Mexico City, San Miguel de Allende, Medellin, Panama City. Extensive direct flights from many US cities.
• Close enough (5–10 hours): Montevideo (9–10 hrs, nonstop from Miami), Lisbon (7 hrs, direct from East Coast).
• Far (14–18+ hours, 2+ connections): Tbilisi (14–18 hrs, no direct, connect via Istanbul), Penang/Chiang Mai/Da Nang (18–20+ hrs, 2+ connections). Time zone difference of +9 to +13 hours.

For anyone who needs to get back to the US frequently, anything beyond a single direct flight adds meaningful friction.

Question 7: Can I get residency — and what does it cost?

• Panama Pensionado: $1,000/month pension income → immediate permanent residency. Includes spouse and dependents. The strongest deal on this list.
• Portugal D7: ~€870–920/month passive income (2025–2026, indexed to national minimum wage) → 5 years to citizenship. Includes family.
• Mexico Temporary Resident: ~$4,400/month income or ~$72K savings (2026, UMA-based, adjusts annually) → 4 years to permanent. Spouse needs separate application.
• Colombia Investment Visa: ~$153K–$166K (350x SMMLV, adjusts annually with min. wage + exchange rate) → 5 years. Separate applications for dependents.
• Georgia: Visa-free 365 days; investment visa at $100K–$150K property (threshold rising) → 5 years. Investment visa includes family.
• Uruguay Pensionado: $100K real estate + $1,500/month income → 10-year renewable. Included in residency.
• Malaysia MM2H Silver: $150K deposit + RM 600K+ property → restructured multiple times. Includes spouse. (Gold tier requires RM 1M+ property.)
• Thailand Non-O-A: ~$22,500 bank deposit → annual renewal only, no PR path. Spouse needs separate visa with separate financial requirements.
• Vietnam: No retirement visa. Business visa or employer sponsorship only. No clear path.

Spousal coverage varies significantly. Panama and Portugal include spouses and dependents by default. Thailand does not — your spouse needs a separate visa with separate financial requirements.

This is a dealbreaker for many couples, especially same-sex couples in countries without relationship recognition.

Where to start

For the cost-and-proximity profile: Panama, Mexico, or Colombia first.

Panama offers the simplest financial structure (US dollar, territorial tax, immediate permanent residency). Mexico offers the closest proximity and largest existing American community. Colombia offers the lowest cost.

Portugal is the premium European option if budget allows.

For queer safety as a primary filter, the Safety by Identity section is the starting point — run the framework there first, then overlay cost.

For understanding the ethical dimensions of your move, read The Other Side of the Ledger before you fall in love with a specific city.