As reported by the Guardian here:
A combination of the weak dollar and the collapse in the US housing market has resulted in US property starting to look more and more appealing to foreign buyers, the majority of whom apparently come from Canada, Mexico, China and the UK. Four in ten homebuyers apparently want to live in the US full-time, whilst the others were purchasing holiday homes or time-shares.
I was surprised to see at the end of the article a mention that many buyers knew to stay out of the US for longer than 6 months each year “for tax reasons”, but do you think that they all really understand the implications of FATCA and the FBAR, especially the 40% of homebuyers looking to move to the US?
Also, my understanding of the “Substantial Presence Test” is that staying up to six months each year is much too long and could still trap most of these homebuyers into becoming “US persons”. Here are the guidelines from the IRS’s own website:
You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States on at least:
- 31 days during the current year, and
- 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
- All the days you were present in the current year, and
- 1/3 of the days you were present in the first year before the current year, and
- 1/6 of the days you were present in the second year before the current year.
If the above is met, then the person is considered to be “US resident for tax purposes”. There are exemptions for foreign diplomatic staff, students, professional athletes and trainees temporarily in the US. No exemption for holiday home-buyers.
How many people do you think are aware of this fact, not to mention the FBAR pitfalls that come attached to this? Let us also not forget the new US government push to attract wealthy investors from overseas to purchase property in the US and be given a path to residency and citizenship, sponsored by no less than Schumer himself. Conspiracy? Absolute indifference so long as money continues to flow towards the US? Or maybe a bit of both of the above and total willful blindness to the damage that the US is doing to its image overseas and the goodwill that it is losing?