Poisson d'Avril, 2010
Southwest France
PLUS:
- Happy Poisson d'Avril!...
- Tax-Free Living As A QRP In Belize?...
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Day 2--Friday, April 2, from Noon EDT, until Saturday, April 3, Noon EDT: You can become a subscriber to the
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Dear Live and Invest Overseas Reader,
"I recently spoke with Nicole Frank," writes Correspondent Lucy Culpepper, "a home exchange veteran with Roof Swap.
"This idea of swapping houses is really a great option for managing the costs of an extended stay in another country. We tell readers regularly to rent first anywhere they're considering settling long-term. But, in fact, better advice might be to swap first. It can be the lowest-cost alternative available for exploring a possible retirement location, for example, and a far superior option both to staying in a hotel (how can you get a real feel for a place 'living' in a hotel?) and to arranging a short-term rental (as renting in a foreign country where the language is different can be challenging and intimidating).
"Many of the people who house swap are retirees, either looking for new overseas adventures or simply wanting to return 'home' for a spell. They are keen to keep their travel costs to a minimum while staying in comfortable, safe locations. Some home exchanges are for short vacations; others can be for months at a time (typically, in this case, with owners of second or even third homes in different countries).
"Even if you have a tiny apartment, you could exchange it for a chateau in France! (It has happened.) The location of your home, no matter how plain it may seem, could be just where another person needs or wants to be. (Think family or friends reunions.)
"Roof Swap has listings all over the world, including in Panama, Ecuador, Peru, Mexico, Argentine, Costa Rica, Uruguay, Brazil, Malaysia, Indonesia, France... Right now there's a two-bedroom house being offered for exchange by a retired couple in Gamboa, Panama. Their house is just 15 minutes from the luxury Gamboa Rainforest Resort. These owners are 'interested in exchanging for almost anywhere in the world'!
"Or perhaps you would like in stay in the Ile de France, in the heart of Paris, in a renovated 17th-century apartment filled with art and antiques. The owners in this case would like to exchange with anyone in New Orleans, LA, or Santa Monica.
"I think this opens up so many possibilities, and I wish I had considered the idea long ago.
"For in-depth advice and tutorials about how to arrange a swap, visit Roof Swap's 'How It Works" page at
www.roofswap.com."
Kathleen Peddicord
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Happy Poisson d'Avril.
We bring this holiday with us from France, where children celebrate the start of April by trying to attach paper fish to the backs of their victims without being noticed.
Most successful is the child who manages to stick a fish to his teacher's back without getting caught.
Jackson, who attends the French school here in Panama City, climbed aboard his bus this morning with a backpack full of construction paper
poissons and a fierce grin.
"Kathleen, it is my understanding, based partially upon information previously provided by your publications, that an American can qualify for the
Foreign Earned Income Exemption (FEIE) in one of two ways. The first is the physical test of being outside the United States for the majority of the year; the second is establishing residency in another country. For this reason, I have been interested in Belize's QRP program and was hoping that becoming a QRP in Belize would allow an American to claim non-resident status in the United States (thereby qualifying for the FEIE). As I understand things, if an American can claim residency in another country, then that American can spend more than one month in the United States per year without incurring a tax liability to Uncle Sam. However,
your recent quote seems to imply that the Belizean QRP will not help in this regard.
"If the American owns property in Belize, qualifies for the QRP, and does not own property in the United States, would that American pass the foreign residency test? What if the person just rents in Belize? Would this change the picture?
"Thank you for your informative newsletters."
-- Dorothy G., United States
An American must be outside the United States for 330 days per year to qualify for the FEIE under the "physical presence test." If you are a bona fide resident of another country, as you suggest, you can spend as much time as you like in the United States and still claim the Foreign Earned Income Exemption, but it could be difficult to prove you are truly a bona fide resident of another country if you keep a house in the United States and don't appear to have established real residency someplace else. The bona fide resident test isn't as black and white as the physical presence test. Some things that help prove you are a bona fide resident of another country are paying taxes in the other country, having a driver's license in that country, and owning a home there as opposed to renting (especially short-term). Plus, of course, you must be a legal resident of the other country. However, legal residency in another country on its own doesn't guarantee you'll pass the bona fide resident test.
The problem with Belize's QRP program,
as I explained in my dispatch earlier this week, is that, while it does give you legal foreign residency in Belize, it doesn't necessarily qualify you as a bona fide resident in Belize for U.S. tax purposes. Owning a home in Belize would help. Having a driver's license in the country would help. Paying income taxes in the country would help (but probably isn't a strategy you want to pursue).
Bottom line, Belize's QRP can lead to tax-free living, even if you're an American, but it's not a guarantee of this unless you take other measures to ensure you qualify as a bona fide Belize resident for U.S. tax purposes.
