USA IN THE GRAY

Comments(1)

• 
  23rd March, 2003

  Shayshay:
  
  My comments are below.
  
  Taxjunkie
  
  [quote]
  On 2003-03-10 00:55, Shayshay wrote:
  HI
  
  TO ALL LOAN AND TAX EXPERTS OUT THERE...
  
  I AM IN NEED OF FINANCING AND WOULD LIKE TO BUY SOME PRETTY EXPENSIVE PROPERTYS BUT I CANNOT FIND THE FINANCING OTHER THAN 65% - 75% LTV...WHERE I WOULD LIKE TO FIND 100 - 103 AND 125% programs of they exist for MILLION DOLLAR PROPERTIES.
  
  I am not aware of any financing such as this from conventional sources (with good interest rates). There are some programs out there that will go up to 80% though, but I am not sure if those lenders will deal with properties in Oregon.
  
  
  ALSO THE TAX IMPLICATIONS FOR DOMESTIC INVESTOR TO OWN FOREIGN PROPERTY...WOULD A DECLARATION OF OFF-SHOR CORPORTATION AND DOMESTIC LIVING TRUST HELP ME KEEP THE USA IN THE SAME POSTION AS BEFORE I GOT THIS STARTED...WOULD I BE TAXED AT BOTH ENDS...?
  
  There could be two consequences. If the foreign jurisdiction has an income tax, then the rental income and the gains on the sale will be subject to that jurisdictions income tax. In addition, the U.S. will tax the income and gains, but you might be entitled to a foreign tax credit in the amount of the taxes you paid in the foreign jurisdiction so that you are not taxed twice on the income. You will need to see if the country has a income tax treaty with the U.S. and if not, then determine if the tax in the other country is a true income tax (not a value added tax ; i.e., VAT) because U.S. tax law permits a foreign tax credit for INCOME taxes paid in another country (but a VAT is not an income tax so that is not eligible for the foreign tax credit). Without knowing the country you are talking about, I can't answer you question directly.
  
  With regard to owning the property through an offshore corporation, that will not prevent the IRS from taxing the rental income or capital gain in most situations because of the U.S.'s "Controlled Foreign Corporation" ("CFC" Rules because the corporation will be classified as a "foreign personal holding company." This assumes that you and/or other U.S. investors own, directly or indirectly, more than 50% of the corporation. To get around these CFC rules, the corporation has to be engaged in a trade or business in that country where the real estate is located. If you are not actively buying and selling properties on a continuous basis in that country, you probably can't qualify for that exception.
  
  The fact that the offshore corporation is owned by a domestic trust will not change the result, unless the domestic trust is an irrevocable trust. But in that case, the trust will be taxed on the income. There is ways around this if the real estate is owned by an offshore life insurance policy, but unless you have substantial holdings in the offshore real estate, it is usually not cost effective to set up such a policy.
  
  
  WOULD I BE BURNING THE CANDLE AT BOTH ENDS...?
  
  I CAN FIND ALL THE LABOE WHERE THE PROPERTY IS FOR A SONG.
  
  
  What is "Laboe?" (real estate?) If you can find alot of real estate and want to set up the operation correctly without worrying about the U.S. tax implication, send me an email. It is not for the average REI, but is quite complicated. There is not enough space here to adequately answer the question.
  
  AND WHEN IT COMES TIME FOR THE YEAR TO CLAIM WHAT MINE HAS TO BE PAID HOW DO I LOWER MY TAXES WITH MULTIPLE PROPERTIES IN OTHER COUNTRIES...?
  
  See above.
  
  ANY ANSWER APPRECIATED...
  
  SHAY SHAY
  
  Sfmtht@pacbell.net
  
  P.S. WHERE CAN I OBTAIN A 15,000,000.00USD LOAN FOR A COMMERCIAL PROPERTY IN OREGON...?
  
  
  
  By the way, there is a number of IRS forms you will have to fill out each year when you own property in foreign countries, especially if you own them through offshore trusts and offshore corporations. Don't simply buy an off the shelf offshore trust or corporation, I have had to help too many unknowing REIs straighten things out with the IRS because these REIs thought that they could save a few dollars without using a lawyer and buying some documents from someone on the web who had no clue of the U.S. tax and foreign property ownership laws. Ultimately, these REIs had to spend 3-4 times the amount it would have cost them originally by using a competent U.S. lawyer knowledgeable in international tax laws.
  
  Good luck and keep me posted on your progress,
  
  Taxjunkie