Process to legally invest in foreign real easte

[thesworduser]

What is the name of your state (only U.S. law)? New York

Hi, I own a C corporation in NYC. I want to take some of the money from the company and go and invest it in real estate property in a country overseas. I want everything to be legal and on the books. I want to buy the property and then sit on it for around a year and two then sell it. My question is, whats the process to do so, and how can I report that initial investment to the IRS and then once I sell the property, how I can show the gain/loss to the IRS?

 

[STEPHAN]

If you want to do foreign investments get a proper CPA and attorney. It might be necessary to also get professional advice in that country. Do not rely on an internet forum.

(I have foreign real estate investments and know what I am talking about.)

 

[LdiJ]

What is the name of your state (only U.S. law)? New York

Hi, I own a C corporation in NYC. I want to take some of the money from the company and go and invest it in real estate property in a country overseas. I want everything to be legal and on the books. I want to buy the property and then sit on it for around a year and two then sell it. My question is, whats the process to do so, and how can I report that initial investment to the IRS and then once I sell the property, how I can show the gain/loss to the IRS?

I concur that you are going to need a tax professional. It doesn't necessarily have to be a CPA, you just want someone that is experienced in handling returns with foreign investments. There are various additional forms that have to be included with your tax return as long as you have foreign investments.

 

[thesworduser]

I concur that you are going to need a tax professional. It doesn't necessarily have to be a CPA, you just want someone that is experienced in handling returns with foreign investments. There are various additional forms that have to be included with your tax return as long as you have foreign investments.

The CPA's I spoke to don't have experience in that and the attorneys I spoke to, are asking money up front without even saying anything....I know it's not good to relay on a forum to get all the information but a little guidance will help....My concern is once I buy a property from there, can it be under my name ( i am the business owner) or does it have to be on the Company's name?

 

[LdiJ]

The CPA's I spoke to don't have experience in that and the attorneys I spoke to, are asking money up front without even saying anything....I know it's not good to relay on a forum to get all the information but a little guidance will help....My concern is once I buy a property from there, can it be under my name ( i am the business owner) or does it have to be on the Company's name?

There is nothing wrong with the property being in either name, as long as the money comes from the proper source.

For example, your C-corp could not pay directly for property that would be in your personal name. The money would have to be paid to you as wages or dividends, be taxable to you, and then you could use it to purchase the property.

 

[thesworduser]

There is nothing wrong with the property being in either name, as long as the money comes from the proper source.

For example, your C-corp could not pay directly for property that would be in your personal name. The money would have to be paid to you as wages or dividends, be taxable to you, and then you could use it to purchase the property.

Okay, that is my last resort but I want to use the company money and to invest that, without me having to take it out under my name, then paying taxes on it....I can't become a representative for the company and invest the money like that?

 

[LdiJ]

Okay, that is my last resort but I want to use the company money and to invest that, without me having to take it out under my name, then paying taxes on it....I can't become a representative for the company and invest the money like that?

The property would have to be in the company name if the company is going to pay for the property directly. There is no loophole or any way around that.

 

[thesworduser]

The property would have to be in the company name if the company is going to pay for the property directly. There is no loophole or any way around that.

Okay that makes it crystal clear, another question, and I appreciate it your answers, I am not too sure yet, if I can purchase the real estate directly under my company since my company is US based and this real estate is in another country but if i open a company there and transfer the money to that company and then buy it under that company, would that work or no?

 

[LdiJ]

Okay that makes it crystal clear, another question, and I appreciate it your answers, I am not too sure yet, if I can purchase the real estate directly under my company since my company is US based and this real estate is in another country but if i open a company there and transfer the money to that company and then buy it under that company, would that work or no?

Why would you want to do something expensive and unnecessary? Of course your US company can own property in another country. At least under US laws they can. Some countries may have laws that prevent foreign ownership of real estate...but it couldn't be many.

 

[thesworduser]

Why would you want to do something expensive and unnecessary? Of course your US company can own property in another country. At least under US laws they can. Some countries may have laws that prevent foreign ownership of real estate...but it couldn't be many.

OH Really? Wow, thank you so much! If I can buy the property under the companies name then I am pretty much good to go, I just need a CPA who can handle the paperwork and everything. Thank You sir!

 

[OK-LL]

OH Really? Wow, thank you so much! If I can buy the property under the companies name then I am pretty much good to go, I just need a CPA who can handle the paperwork and everything. Thank You sir!

Just a word of caution -- be SURE to discover whether the country you wish to invest in allows foreign private or corporate ownership; I think there may be more than you think that do restrict this--VietNam and Mexico leap to mind, for starters. In those cases you may have to establish a domestic (to that country) corporation, following their restrictions for corporate ownership, and the tax implications that follow.

 

[thesworduser]

Just a word of caution -- be SURE to discover whether the country you wish to invest in allows foreign private or corporate ownership; I think there may be more than you think that do restrict this--VietNam and Mexico leap to mind, for starters. In those cases you may have to establish a domestic (to that country) corporation, following their restrictions for corporate ownership, and the tax implications that follow.

Yes you are right, what is next though? I purchased property under my company name and I have the proof of purchase, when I do my company taxes, what additional forms I need to fill out to show that I invested in foreign property?

 

[LdiJ]

Yes you are right, what is next though? I purchased property under my company name and I have the proof of purchase, when I do my company taxes, what additional forms I need to fill out to show that I invested in foreign property?

You mean what additional forms does your corporation need to fill out.

I am not going to tell you because 1) its complicated, and 2) you have no business attempting to do it without a tax professional.

 

[thesworduser]

You mean what additional forms does your corporation need to fill out.

I am not going to tell you because 1) its complicated, and 2) you have no business attempting to do it without a tax professional.

Okay that is fair enough. Last question ( I hope) I was look at FBAR requirements and don't understand what this means:

.....the owner of record or holder of legal title is your agent or representative; you have a sufficient interest in the entity that is the owner of record or holder of legal title.

What does it mean "...the owner of record or holder of legal title is your agent or representative"?
It's mentioned in the 4th row in a chart from this website: http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements

 

[LdiJ]

Okay that is fair enough. Last question ( I hope) I was look at FBAR requirements and don't understand what this means:

.....the owner of record or holder of legal title is your agent or representative; you have a sufficient interest in the entity that is the owner of record or holder of legal title.

What does it mean "...the owner of record or holder of legal title is your agent or representative"?
It's mentioned in the 4th row in a chart from this website: http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements

See a tax professional.