Foreign Real Estate
Posted on : 4/10/2009 1:52:00 PM
When considering a purchase of foreign real estate you must thoroughly research property rights, holding structures, and tax and estate issues before making a purchase. Assumptions about owning real property that are based on U.S. experience do not necessarily apply to another country. Despite globalization, real estate remains inherently local; it is governed by local laws and subject to local economics. This is true whether you are buying a vacation home or are an international land developer. Also, remember that foreign real estate and U.S. real estate are not considered like-kind property and therefore cannot be exchanged tax-free. Below are a few key questions to begin your research process:
What is my motivation or goal in purchasing real property in another country?
Can I and should I own the property directly or must I or should I own it through a trust or company?
Can I own the property indefinitely or can I only own it for a term of years?
Can a title search be done to determine who has rights to the property and, if so, how certain can I be that I will own the property free and clear?
Can I rent or lease the property and, if so, who has the right to the income produced from the property?
Are there any pre-emptive rights or restrictions on the transfer or sale of the property?
What is my cumulative tax liability associated with the property from acquisition to ownership to sale?
Can the property transfer to my benefactor of choice when I die or will local laws decide who gets the property?
What happens if there is an accident on the property or the property is destroyed by a fire or hurricane or other disaster?
How much time do I plan to spend at the foreign property?
Remember, this blog is general information only and is not provided as advice for a particular matter. Laws vary from state to state and country to country. For specific advice, consult your attorney and CPA.