New Tax Rules Have Hidden Traps Do you own a condo or timeshare outside the US? If so, you need to read on
As the HIRE Act begins to phase in, US Citizens and residents are already required to fill out the new 8938 form with their tax returns. If you are reading this newsletter, you are likely to have one of these entities and be required to fill out the forms or face severe penalties including up to 5 years in jail. Yes, 5 years in jail for failing to file the form.
The one huge slip up for tens of thousands of US folks will be the condos and property in Mexico along the coasts. Under Mexican law, the only way foreigners can own this land is through a "Fideicomiso" or bank trust. Are you a property owner in Mexico? Do you have a timeshare anywhere in the Caribbean or Latin America? How do you own it? Because private ownership of real estate in generally thought to be non-reportable under the new regs and specifically on the 8938 form, many US residents and citizens will miss this one.
But the law is clear on this. If there is any structure between you and the title in your name, in the case of Mexico, a bank trust, or a timeshare fractional corporate structure, then the asset must be reported on the 8938. Remember, failure to report is punishable with up to 5 years in jail.
I say that jail thing twice because the US wants a reporting of all assets of all US citizens and residents. There’s no more Scout’s Honor when it comes to the Treasury Department. Reagan’s dictum, "Trust but verify", is in full implementation and they have the computer power to process massive amounts of data from millions of sources worldwide. They have also linked the INS and IRS computer files so "Welcome Home" at immigration might take on a whole new meaning in the near future. But that is an article all by itself.
So, as we’ve been saying for nearly 2 decades, file the forms, follow the rules and enjoy a phenomenal life overseas. But don’t get tripped up with stuff you didn’t know you didn’t know. "Ignorance is no excuse for the law", except of course for those in congress who have to pass laws before they read them.
Morey Glazer and Joel Nagel will be presenting the fine details of this law along with the tax reporting and compliance issues that US Citizens must follow to be and stay compliant at an upcoming conference in January. The conference is part of our rotating series of Hemispheres Publishing Asset Protection and Global Investment seminars hosted around the world. If you missed the sold out conference in Belize last month, consider signing up early for the next event being held in Managua, Nicaragua, January 15-20.
Click Here to receive the full agenda and registration information.
A special one-day pass is available for Expats living in Nicaragua who want to hear the tax and compliance sessions presented by Nagel and Glazer on Day-2 of this fantastic event. Sign up now and see why sell-outs are becoming the norm for these content rich, deep inspections of critically important data for a rapidly globalizing world. Click Here to receive the one-day pass that includes a full day of sessions, lunch, and a networking cocktail party with attendees and presenters alike.
