I have been in the US on holidays for a month now. We purchased a little getaway place in Florida last spring in hopes that we could already be set up to go as snowbirds in 3 to 5 years. No real estate agent ever mentioned any new laws that state that foreigners might have to file tax returns on their worldly income if they stay longer than 120+ days in the US or that the IRS gets inheritance tax benefits in case any of us should parish. Many of our Canadian neighbors are upset about the prospect and I need to send them proof of this law that took effect at the first of 2011. There was once a link to an article about it on the expat site but I am not able to find it. Does anybody have information about this or a link that I could forward to my neighbors?
I have also been talking to my American neighbors about FATCA and how dual citizens such as myself are being penalized for living outside the US borders. Deer in headlights. I am guessing that many people might be suspicious that I have been evading taxes. We all know that the USA is the greatest, most honest,most God fearing government in the world and anybody would kill to be able to live here. People believe what they want to believe and they like the story about America still being the land of opportunity and grace.
I even talked to a contractor about possibly doing reno in our home. I brought up the foreign home owner issue to him and he actually knew all about it, but hasn’t told his customers, of course. I told him that I was holding back on everything I want done here for fear of the tax problem, so that is effecting his business and he might think about writing his congressman. One Canadian family told me today that they were also going to do renos until I mentioned the above.
Anyway, I am hoping that if we can get enough Canadians and foreign property owners involved on this side of the border and get the newspapers to publish our promises of clearing out and taking our dollars with us that maybe they will get the point. If they think their economy is bad now, just wait.
Please post any links that you think might be helpful for me to pass along. Thanks!
there is an older thread on this site that deals with snowbirds and FATCA, keep searching through older posts to find it
Omater,
On a previous thread you mentioned about an Accountant that you decided not to go with….i hope it was not one that I recommended to you on the expat forum 🙁
If so, i applolgize and hope it was not a big error in judgement.
rivka, I am not really referring to FATCA, but thanks. I am talking about foreign nationals who buy property (including homes) in the USA and in some cases will be required to file a US tax return on their worldly income.
Mach7, don’t worry or apologize. No harm was done! I will explain in private if you like, but I am not sure how to do that yet.
Omater,
you can email me jem113@hotmail.com
Would be interested in hearing about it. I might think twice about recommending him if your case was regarding a specific situation.
Try using the search tool on the upper right side bar. If that doesn’t yield happy results, try searching with google in which the search line includes: ite:http://isaacbrocksociety.com.
The IRS discusses some of this at their link: http://www.irs.gov/businesses/small/international/article/0,,id=129631,00.html
“Foreign Persons Receiving Rental Income From U.S. Real Property
U.S. real estate professionals and rental agents/property managers are encountering an increasing number of situations that involve foreign persons’ acquiring U.S. real estate as a part-time residence, for investment or in some cases to conduct a U.S. business. The U.S. tax rules that apply to ownership and dispositions of U.S. real estate by foreign persons are different in some important respects from the rules that apply to U.S. persons.
U.S. real estate professionals must know how to properly deal with foreign investors in U.S. real estate in order to be in compliance with the federal tax laws affecting real estate transactions. They must be familiar with the rules that determine whether an individual or entity is to be treated as a U.S. person or a foreign person. In addition, they must also be familiar with the fundamentals of U.S. federal income taxation of foreign investors with U.S. rental income. Under U.S. tax law, a taxpayer can depreciate the property. There are different depreciation rates for residential and commercial properties. This annual depreciation is deducted from income as an expense on an income tax return. However, it may be recaptured if the property is sold…”
This is a bit on the subject:
http://nestmann.sovereignsociety.com/2011/11/16/foreign-investors-in-u-s-real-estate-beware/
I would like to know if there is a code published online that will back up what he is stating from paragraph 6 To the end of the article, if anyone happens to know.
“Buyer must live in home for 180 days per year” comes from VISIT USA Act (H.R. 3341) §8(a)(iii): http://www.opencongress.org/bill/112-h3341/text
The Substantial Presence Test is in Internal Revenue Code §7701(b)(3): http://www.law.cornell.edu/uscode/usc_sec_26_00007701—-000-.html
Phil Hodgen has a very good explanation of how that results in a “120 days per year” rule: http://hodgen.com/the-substantial-presence-test-explained/
There is an exception for “closer connection to a foreign country”, but if you want to claim this exception you have to prove it on Form 8840: http://www.irs.gov/pub/irs-pdf/f8840.pdf
§7701(b)(1)(A)(ii) results in persons meeting the SPT being treated as “resident aliens”. §7701(a)(30)(A) results in “resident aliens” being treated as “US persons” and hence subject to everything else (FATCA, FBAR, foreign trust reporting, estate tax, etc.).
http://www.jdsupra.com/post/documentViewer.aspx?fid=e840245c-ce33-4456-9806-0cd792a6faf9
You might follow progress of this bill here: http://www.govtrack.us/congress/bill.xpd?bill=s112-1746
S. 1746: Visa Improvements to Stimulate International Tourism to the United States of America Act
112th Congress: 2011-2012
A bill to amend the Immigration and Nationality Act to stimulate international tourism to the United States.
Sponsor: Sen. Charles Schumer [D-NY]
Status: This bill is in the first step in the legislative process. Explanation: Introduced bills and resolutions first go to committees that deliberate, investigate, and revise them before they go to general debate. The majority of bills and resolutions never make it out of committee. [Last Updated: Dec 15, 2011 6:22AM]
BILL OVERVIEW
Co-sponsors:
Show Cosponsors (5)
Text:
Summary | Full Text
Status:
Introduced Oct 20, 2011
Referred to Committee View Committee Assignments
Reported by Committee …
Senate Vote …
House Vote …
Signed by President …
Last Action:
Oct 20, 2011: Read twice and referred to the Committee on the Judiciary.
Other Titles:
— VISIT USA Act
Related:
See the Related Legislation page for other bills related to this one and a list of subject terms that have been applied to this bill. Sometimes the text of one bill or resolution is incorporated into another, and in those cases the original bill or resolution, as it would appear here, would seem to be abandoned.