Taxes And The American Abroad
Escaping The Extraterritorial Tax Burden
Oct. 11, 2009
Casco Viejo, Panama
PLUS: Three Reasons The Panama City Property Market Will Not Crash...Name Your Own Price In The World's Top Markets In Crisis...Settling In In Southwest France (Yes, You Can Afford It)...
AND: Panama Vs. Costa Rica Vs. Belize Vs. Ecuador Vs. Nicaragua...
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A Moment Of Calm...A Window For Action
This is your moment of opportunity in this country that, more than ever, qualifies as the world's top retirement, investment, business, tax, and offshore haven.
The market has softened. Not dramatically, but real estate sales and prices are down. It's a window of calm between one bull run and what I predict will be another.
Panama has not been completely unaffected by the global financial meltdown, but the effects have been marginal and welcome. The Panama City market, especially, both for sales and rentals, was running on overdrive. It's settled down now, creating a window of opportunity for both the retiree and the investor.
This is the place to be (as a retiree, an investor, and an entrepreneur) for the coming decade. Here's your chance to stake your claim here while prices are down and sellers are more negotiable than they've been in a half-dozen years. Details here.
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Dear Overseas Opportunity Letter Reader,
"The United States is perhaps keener than any other country on earth," writes Correspondent Vivian Lewis, "to apply American rules to Americans wherever they happen to live and work. The USA is almost unique in the world for taxing its citizens on worldwide income, even if they are living in a foreign country to earn it.
"Extraterritorial tax burdens are relieved by double-taxation treaties with a bunch of respectable countries, to make sure that the same earnings are not taxed twice. But the issue is not just about earned income.
"Some Americans seek to escape the IRS by surrendering their passports. Sir John Templeton became a Bahamian for that purpose. But, nowadays, renouncing your nationality incurs a dissuasive tax, too. Moreover, ex-American tax exiles can still be taxed for some U.S. assets: property, gifts to American residents (including family), and for their estates.
"One of the oldest banks in Switzerland, Wegelin & Co., decided to say genug. It has pulled all investment out of the United States and will turn any American who manages to find their discrete brass plate away from their doors. The reason is simple. If the bank has a deceased client from a third country whose heirs include ones who at one point in their lives were subject to U.S. taxes (as a student, say), the whole estate becomes subject to U.S. probate. There are rules against Americans leaving money to foreign nationals in their wills. It is unclear if taxes can be claimed; but the delays and costs would be hard on the other heirs. Other banks in Switzerland and even Britain say they are thinking about turning Americans away, too.
"I was sent a form by the Social Security Administration this week seeking information about other countries' pension plans I might have contributed to in the course of my peregrinations around the globe, to make sure I did not benefit from a pension windfall from payments made after 1952 as a result.
"This was worrying, because my late mother, who had paid into the German pension system before the Nazis came to power, was flush in her later years because she collected so many payments (Social Security for herself and as my father's widow; her pension from her U.S. employer; and a German 'Rent' for her own working days in Schluechtern and as my father's widow).
"Because I had to file U.S. income taxes while living in Paris, I also paid U.S. Social Security tax--both sides, in fact, for, as a free-lance journalist, I was self-employed. I was exempted from earned income tax because I did not earn US$70,000, the limit at the time. But that limit is falling along with the dollar today..."
Kathleen Peddicord
P.S. Vivian writes regularly at www.global-investing.com.
P.P.S. Friends with a long and successful history of investing and doing business in Belize are holding a Cayes to Wealth and Security Conference on Ambergris Caye next month (Nov. 12-14) that will focus on the tax and asset-protection issues Vivian raises today. This amounts to the best current opportunity I know to speak with long-standing experts in this field. Discussed will be the "Stop Tax Haven Abuse Act" under discussion by U.S. Congress and regulatory changes to which types of offshore assets an American must declare to U.S. tax authorities (insurance, for example, for the first time).
I'm trying to work my schedule so I can participate and address the group, so I may see you there. I appreciate any excuse to spend time in this country. For more information, get in touch here.
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P.S. What else this week?
- "It seems the whole world is watching and waiting for the 'best' deal before making a real estate buy right now," writes resident global real estate investing expert Lief Simon.
"With few exceptions, global real estate markets have slowed or stalled. The speculators are mostly out of the game. Investors and the end-users (people looking to buy a place to live) are in the market but moving slowly. They are shopping, circling like sharks in some cases, waiting out the sellers. They're watching for absolute collapse.
"This is all healthy and part of the long-term cycles of global property markets. The trick is not to wait so long that you miss out altogether..."
PLUS: I launched my Overseas Retirement Letter one year ago this week. I take great pleasure today in reporting that, in the 12 months since, my Overseas Retirement Letter team has helped thousands of readers begin to make the leap and launch their adventures abroad. Subscribers write us every day to share the stories of their success...
"Here's me on the deck of my new Roatan home!" wrote subscriber Pam S. recently, attaching a photo of her new retirement residence in the Bay Islands. "We found ourselves a dream house with a great ocean view. We now own a little piece of paradise..."
And:
"I left the USA in July 2009," wrote Carol A. "I researched carefully and am now in the place I want to be: Isla la Piedra, Mexico. I have found a three-bedroom furnished house to rent through a local family here for US$300 per month..."
We're delighted and proud to have had something to do with this. And we want to celebrate. To mark this milestone, we're officially launching today our biggest sale ever. In fact, we're launching three sales!
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