8938.
That is the number of the IRS form you have to fill out to report foreign financial assets.
If you own foreign assets, you have to fill out IRS Form 8938 even if you’ve lived out of the country for most of your life.
However, here’s an important point: You do not have to report foreign real estate on 8938.
Here’s the relevant reference from the IRS’s website:
“Foreign real estate is not a specified foreign financial asset required to be reported on Form 8938. For example, a personal residence or a rental property does not have to be reported.”
The IRS wants every dollar and dime it can claw together, right? So why would they leave foreign real estate alone?
It’s a matter of practicality.
Even if they wanted to, how is the IRS (or anyone else, for that matter) going to seize or force the sale of your second home in Belize… your condo in the Dominican Republic… your penthouse in Colombia… your beach house in Mexico… your farmhouse in Portugal… or…
You see my point.
Lawyers, former spouses, friends, employees, and business partners with axes to grind are stone-walled, too. None of them can touch your Panama villa with the avocado and mango trees growing in the backyard… no matter how many attorneys they hire.
For me, this makes a rental in Paris… or Medellín… or Lisbon… a piece of property anywhere in the world… the safest, smartest investment I can imagine.
It’s like having a Swiss bank account that you can stay in on vacation… and that you could even eventually retire to…
The ultimate strategy (just as a Swiss bank account was long considered to be) for both storing wealth and keeping it private.
Now, this strategy born of a significant loophole is not a free-for-all. There are some rules…
You have to report any income you make from the property (the IRS gets their pound of flesh, but they can’t ever take the underlying asset from you).
If you decide to hold the property in a trust or a LLC, then your interest in either of those has to be reported.
Hold it in your own name, though, and you don’t have to report it… not even if you own an entire village in a sunny, balmy Caribbean paradise.
If you’re a long-suffering reader, you understand how committed I am to global real estate as an asset class.
It’s the ultimate investment for both excellent return and privacy and protection, superior to investing in stocks and mutual funds in nearly every way.
With my wife Kathleen and I have a growing portfolio of real estate in a variety of locations around the world.
Thanks to this strategy, which we have pursued together over more than two decades, we aren’t worried about our retirement. We aren’t worried about our kids’ futures. We aren’t worried about U.S. markets, the future of the U.S. dollar, or the fast-approaching U.S. presidential election…
We’ve been able to travel the world for fun and for profit. And, as a result of this strategy, we’ve evolved a lifestyle that is both comfortable and filled with adventure and that will convert, whenever we’re ready to pull the trigger, into our retirement plan…
A retirement that will have us dividing our time among some of the world’s best places to spend time… in properties that we own and that, right now, are generating cash flow to the tune, in some cases, of 16% per year and more.
This is the best time in history to take advantage of what I’ve come to think of as the New Swiss Bank Account strategy.
This is also the most critical time in our lifetimes to begin investing in real estate overseas… or to expand your portfolio if you’ve already begun.
Preserving your wealth in offshore real estate is a heck of a lot more fun than putting it in a stuffy bank vault.
You get to do real stuff with your money… cool stuff… rather than just locking it away with a banker.
Now, I realize (with Kathleen’s help) that not everybody is like me. You may not want to own dozens of properties all around the world. You might simply want a second home in paradise… whatever that means to you.
I don’t like the Caribbean.
You might love it.
I like the city.
You might want to be up in the mountains.
That’s what’s great about this New Swiss Bank Account strategy… you can build whatever kind of investment portfolio and accompanying lifestyle that you want.
You could follow my lead and go big…
Or you could just find your place in the sun… safe, separate, and secure from the government and other parties out to get your money.
How, exactly, do you get started at this… and how, in time, do you build a safe, private, and high-yielding portfolio that appreciates in value while doubling as an adventure-filled lifestyle?
That’s one of the important questions we’ll be addressing in detail during my Offshore Wealth Virtual Summit next month. Details are here.
Lief Simon
Editor, Offshore Living Letter
