Locations

Real estate investment in the United States

Now is maybe the best moment for investing on real estate in the United States in Terms of security, incomes and appreciation. However, as you would expect, the government is looking out to value these goods appreciation when they get sold and value them at the moment of donating or passing. These tax burdens are stronger for aliens, because they lack of some credits and benefits that are within reach of American citizens and some tax residents.

Foreigners can even minimize the tax effects over their investment using some legal structures and realizing a good planification before acquiring a property. For those who are actually owners at personal title or through a properties Limited Liability Company (LLC), should move quickly to transfer their properties deedsto legal structures that may decrease legal risks and avoid unnecessary taxes. Anyway, for legal purposes with tax benefits is very important to have an estimated complete plan before signing a sales contract.In fact, many people give advice about this type of structures explaining that they don’t provide any legal or tax consultancy in the United States, neither verbally nor using small letter inside the contract; however, only an attorney specialized on international tax matters can design, create and support a personalized legal structure capable to exceed the tax authority scrutiny (IRS) and any other court where a claim or succession is build.
Even though an alien does not issue a tax return and has no interest on business in the United States, at the moment of being the owner of a property in this country, you must issue a tax return at the moment you make provisions in case of succession or death. The wealth inheritance tax of an American citizenor a tax resident includes allassets and interest that belong to the deceased, including those located all over the world.

At the Other hand, an alien inheritance taxes only includes goods located in the United States [1]. The definition of assets located in the United States include all real Property, but excludes some kind of intangible properties as stocks in foreign companies. Inheritance taxes are adjusting at 40%. People considered as residents have a credit that protects the first US$ 100 million (inflationary adjustment) from their tax assets, while aliens just receive a credit of US$ 60,000. In other words, if an alien pass away being owner of properties located IN THE United States with a value exceeding the US$ 60,000, there is a possibility for this properties to be seized if the inheritance taxes are not paid. Joined to this distinction and in contrast with the treatment received by whom are tax residents, the properties that are part of a foreign heritance are normally adjusted to the market price without mortgages deductions and without considering the amount paid for the property. The marital deduction that essentially exempt any transference between spouses from being taxed, is not available if the surviving spouse is not an American citizen [2].
[1] Attention must also be given to prevent an alien to be considered as a tax resident with tax benefits because of having settled up a home in the United States. Rules to determine the establishment of home in the United States with inheritance tax purpose are very different to the rules and criteria with emphasis on counting the days that apply to determine if a person has a substantial presence for tax income purposes.

[2] In this case, can be recommendable to use aQualified Domestic Trust (“QDOT”).

How can we remove the asserted tax for aliens or foreigners?

Simple, it’s enough to say that Inheritance taxes in the United States don’t cover foreigner actions realized through some kind of foreign companies that are not owners of properties located in this country. For an effective provision at the moment of an inheritance, the foreigner or alien must lead the stocks provision or interests on the foreign company owner through a trust or will, and due to the company is not considered as an asset located in the United States, it is not assigned inheritance taxes.

In order for a strategy as this to be approved by the IRS, it has to be correctly prepared and planned, confirmed with the appropriate documentation and carefully preserved. Also, should be considered that the use of a foreign company to remove inheritance taxes can lead to certain circumstances referred to tax income that may be considered according to the type of property and the nature of the investment as for example, the way the property is going to be used.
At the same time is important to consider that using a foreign company to retain properties has some benefits not related to taxes, as keeping the property beyond the scope of an inheritance legal process and, at the same time allow an anonymity level in connection with the real owner of the property. This structure can also isolate and limit the risks in which the foreigners or aliens could be exposed in connection to accidents that may occur in the property, if it is properly administrated under a structure properly established.

Legal issues related to properties investment start with the decision of which conditions should be added, changed or eliminated from the standard purchase agreement of the real estate. Therefore, the property should be physically examined and its property title must be proven to determine if there is any legal problem with it and, in case of being that find the way to solve it before finishing the sale.

Why investing on real estate in South Florida, United States?

High price incentives, lack of new constructions and a friendly environment benefits all Latin American investors. This is what Florida State offers, located at United States south, which has become in one of the most important places for local and foreign real estate investors

And that’s because real estate projects keep on being attractive, and marked by great investment. For example, with an average of US$ 287.000 we can buy a Property in Miami, what is attracting many investors, not only Peruvians but from every part of the world.
About this, Mr. Fabian González, director at Miami Pro Brokers group, working on real state in Miami, says that Peru occupies the sixth place after Colombia and Venezuela at the ranking of countries that have presence on that destination as an opportunity on real estate business.

Another factor to consider is that our country occupies the sixth place of the total sales between all the countries that invest in Florida, with the 3.9%, according to Miami Herald ranking. Mr. González says also that Peruvian customers’ investment amounts oscillate between US$ 100,000 to many millions.

Apartments, offices and commercial premises (stores)

According to profitability and type of leading business, most of people choose renting apartments to generate a profit in us dollars, with a cash payment of US$ 120,000.

Other ways of investing in Florida are focused on buying offices, stores, warehouses and malls, where profitability is approximately between 5% or 6% annually.
It is recommended to open a Limited Liability Company in Florida, so that this way will be more efficiently with taxes related to property and for having responsibility protection. You don’t pay taxes over the property but only over the net income that the Property generates.

It is possible to realizeinvestment in Florida from US$ 50,000 henceforth, and for that exist a diversity of investing products for all kind of customers that go from Private Funds investing, buying properties for rent and have a monthly income in dollars, purchase of land, purchase of projects in plans (preconstruction), investing on projects that can give a right for obtaining an investor visa, among other things.

According to Forbes magazine, from the beginning of 2018, Florida State has most of the cities with favorableterms for investment between other 49 states of the Union. Five of the ten best cities for investing on housing on 2018 are from this state. These cities are:


Fort Lauderdale

Is the best part of Florida and although rent cost is one of the highest of the state, the dwellings value is on the average. The estate counts with the increase of costs in the years to come.

One not minor fact is that Fort Lauderdale has been leading the employment growth in Florida, which means that there will be demand on renting and selling.

Average monthly rent:

US$ 1.937

Cost of an average size house:

US$ 318.141

Tampa

Last year, Tampa was considered the second better city for real estate investment in the United States

In fact, all Tampa Bay area is considered a good place to rent and buy. Tampa has experimented a valorization in two digits on its costs.

Average monthly rent:

US$ 1.186

Cost of an average size house:

US$ 173.250

Jacksonville

Here, housing cost increases in 9% each year.

At the same time, the city population increases in 5% and there is a 4% of employment growth each year, too.

Average monthly rent:

US$ 1.061

Cost of an average size house:

US$ 165.755

Orlando

This is another city that leads the list of qualifications in the world of real estate investment. Along with a boom in economy, has a stable growth in population and work market, and this means an increasing demand on housing. Orlando is, foremost, an active city that remains as a popular touristic attraction and has an increasing reputation as the new business center.

Average monthly rent:

US$ 1.327

Cost of an average size house:

US$ 183.548

West Palm Beach

It is known as one of the best beach cities for investment on renting properties. Local market is dynamic and distinguishes by a variety of housing options, from a high cost waterfront houses to other relatively cheaper at the west. Prices and location are two things that make West Palm Beach an attractive market for investing on properties.

Average monthly rent:

US$ 1.480

Cost of an average size house:

US$ 250.784

Other cities with a potentially beneficial market are Pittsburgh (Pennsylvania), St. Cloud (Minnesota), Houston (Texas), Chicago (Illinois), Indianapolis (Indiana) y Kansas City (Missouri).