“I’ve just gotten residence in Ecuador. That means I don’t have to file my U.S. taxes anymore, doesn’t it?” This is the type of question I hear regularly. There are many misconceptions about Americans living overseas, a common one being that once you move overseas, you are no longer required to file a tax return.
We recently asked Nick a series of questions that IL readers have wondered about, including "Can I own real estate overseas in my IRA?" and "What else can I own in my IRA? Costa Rican farms? Boat slips?" and "Can I hold a mortgage in my IRA?"
The New York winters were getting too cold for Terry and Sue Jones. Apart from that first, pristine snowfall of the year, it just wasn't fun anymore. Their friends started retiring to Florida, sending them Christmas cards of white-sand beaches and palm trees. The Jones’ were considering moving there, but they discovered International Living and decided to look for their new home overseas.
Using your self-directed IRA to buy real estate is a hot topic in the tax world. But there are misconceptions surrounding it. Misconceptions that, if implemented, might cost you thousands in taxes. One of the big benefits of buying real estate with your IRA is tax deferral. But in order to benefit, it’s important to have all the facts. It can be easy to make a tax or legal mistake…so here are some dos and don’ts for owning real estate in self-directed IRAs.
When I talk to International Living readers, I usually focus on sharing how you can minimize your U.S. taxes and stay out of trouble with the IRS. But today, I’m going to do something a little different. I'm going to share with you what I do. I live part of the year in Jaco, Costa Rica. When I bought my condo, I kept the owning and renting of this foreign real estate simple: I bought it in my own name. That’s pretty unusual; Jaco is one of the few remaining areas that allow Americans to own beachfront property in their own name. This keeps my U.S. tax reporting of the rental income reportable—just like a U.S. property—and I do not have to make a foreign corporation disclosure.
As a U.S. citizen, no matter where in the world you live, the IRS requires you to report your income, file your tax return, and pay your taxes. There are many common misconceptions about Americans living overseas, a common one being that once you move overseas, you are no longer required to file a tax return.
Genevieve from Atlanta married a prince from Monaco. She moved all her belongings to her new home to live there with him. As a U.S. citizen abroad, she files her annual tax return with a status of Married Filing Separate. All assets are in her husband’s name and nothing is titled jointly.
Many people are surprised to learn that one of their biggest tax-planning decisions when it comes to living overseas has to do with where they live before they go. It’s one of the most overlooked aspects of tax planning. Put simply, there are states that are “no-income tax” states. If you move overseas from one of these, then you’ll pay no state income tax.