Foreign Real Estate: More Than a Second Home

Spending time abroad is one of the best ways to gain perspective on one’s “home.” That’s why I own foreign real estate, and why I’ve spent a good chunk of my time working on my lovely seaside cottage south of Cape Town—a property I snapped up 20 years ago for about $15,000. (It’s now worth over 10 times that.)

But this property, for me, is more than just a place I can go to re-charge and re-collect.

The knowledge that I own a second home outside the U.S. is also a source of great comfort to me and my family. That’s a feeling you can share with me…and 2017 is the year to do it.

Why You Should Invest in Foreign Real Estate this Year

I can think of three good reasons why 2017 should be the year you consider investing in foreign real estate:

1. Foreign real estate is one of the safest and most reliable forms of wealth preservation out there. Lots of things can happen to stocks, bonds, currencies, and commodities, but land and housing are always in demand.

2. You don’t have to report foreign property owned in your own name (i.e. not via an LLC or other vehicle) under the Foreign Account Tax Compliance Act (FATCA). That makes it last in line for the wealth confiscators.

3. Foreign real estate is the ultimate escape plan…a place to go if the time comes. My South African property checks all three boxes, and I’m happy as a clam.

I ended up owning South African property for unique reasons that wouldn’t apply to everyone. Chances are if I were starting out today, I’d look to own foreign real estate in the South American nation of Uruguay. Excellent residential property in Montevideo, the seaside capital city, can be had for as little as $100,000, where residential rental yields are from 6% to 8%. And Uruguay is one of the most immigrant-friendly countries on earth, with strict financial and personal privacy laws.

Purchasing property in Uruguay is simple and cheap. The transaction would cost you about $8,000 per $100,000 in property purchased. You’d pay property tax of 0.25% per annum. If you sell the property, capital gains tax would be 12% under current law.

Protection in More Ways Than One

Given extensive (and frankly, invasive) reporting requirements to the IRS and the U.S. Treasury Department, it is critical to own financial assets that aren’t reportable—and therefore, not factored into your net worth.

If you open a financial account overseas and have more than $10,000 in it at any time during the year, you have to report it on your annual income tax form. Same goes for your interest in any foreign investment fund, corporation, LLC, trust or other entity.

Armed with this information, the government will know how much you’ve got and where to go when the time comes to rob you, no matter where your money is around the globe.

But because foreign real estate isn’t a “specified foreign financial asset” under U.S. tax law, you don’t have to report it at all.

Like gold or gems in a vault in Montreal, artwork in a Swiss duty-free warehouse, or stamps in a safe deposit box in Guernsey, foreign land could be your own little—and perfectly legal—secret. It’s a way to park your wealth in a place and form that can’t be touched by the government under current U.S. law.

Simply, it’s a no-brainer. With all that’s going on in the U.S. today, make 2017 the year you go beyond resolutions…to action. Owning foreign real estate is one of the simplest and safest ways of securing your future and your wealth.

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