• About Us
  • Contact Us
  • Privacy Policy
  • Terms
  • Unsubscribe
No Result
View All Result
Live and Invest Overseas
FREE REPORT
BEST PLACES TO RETIRE
*No spam: We will NEVER give your email address to anyone else.
  • HOME
  • COUNTRIES
    • Top Destinations
      • Portugal
      • Panama
      • Belize
      • France
      • Colombia
      • Dominican Republic
      • Thailand
      • Mexico
      • Spain
      • Argentina
    • Browse All Countries
    • Best For
      • Retire Overseas Index
      • Health Care
      • Cost of Living
      • Investing in Real Estate
      • Editor’s Picks For Retirement
      • Establishing Residency
      • Starting an Online Business
      • Single Women
      • Playing Golf
  • BUDGETS
    • Super Cheap ($)
      • Cuenca, Ecuador
      • Chiang Mai, Thailand
      • The Philippines
      • Las Tablas, Panama
      • Granada, Nicaragua
    • Cheap ($$)
      • Algarve, Portugal
      • Medellin, Colombia
      • Boquete, Panama
      • Carcassone, France
      • Buenos Aires, Argentina
    • Affordable ($$$)
      • Abruzzo, Italy
      • Barcelona, Spain
      • Las Terrenas, Dominican Republic
      • Puerto Vallarta, Mexico
      • Costa de Oro, Uruguay
    • Luxury On A Budget ($$$$)
      • Ambergris Caye, Belize
      • Paris, France
      • Panama City Beach Area
  • Real Estate
  • ARCHIVES
    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore Diversification
    • Our Latest On Coronavirus ⚠️
  • Making Money
    • International Real Estate
    • Banking
    • Employment
    • Investing
  • CONFERENCES
  • BOOKSTORE
Live and Invest Overseas
  • HOME
  • COUNTRIES
    • Top Destinations
      • Portugal
      • Panama
      • Belize
      • France
      • Colombia
      • Dominican Republic
      • Thailand
      • Mexico
      • Spain
      • Argentina
    • Browse All Countries
    • Best For
      • Retire Overseas Index
      • Health Care
      • Cost of Living
      • Investing in Real Estate
      • Editor’s Picks For Retirement
      • Establishing Residency
      • Starting an Online Business
      • Single Women
      • Playing Golf
  • BUDGETS
    • Super Cheap ($)
      • Cuenca, Ecuador
      • Chiang Mai, Thailand
      • The Philippines
      • Las Tablas, Panama
      • Granada, Nicaragua
    • Cheap ($$)
      • Algarve, Portugal
      • Medellin, Colombia
      • Boquete, Panama
      • Carcassone, France
      • Buenos Aires, Argentina
    • Affordable ($$$)
      • Abruzzo, Italy
      • Barcelona, Spain
      • Las Terrenas, Dominican Republic
      • Puerto Vallarta, Mexico
      • Costa de Oro, Uruguay
    • Luxury On A Budget ($$$$)
      • Ambergris Caye, Belize
      • Paris, France
      • Panama City Beach Area
  • Real Estate
  • ARCHIVES
    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore Diversification
    • Our Latest On Coronavirus ⚠️
  • Making Money
    • International Real Estate
    • Banking
    • Employment
    • Investing
  • CONFERENCES
  • BOOKSTORE
No Result
View All Result
Live and Invest Overseas
No Result
View All Result

An Active Participant

Live And Invest Overseas by Live And Invest Overseas
Oct 18, 2013
in Investing
0
Tax Benefits Of Moving Overseas
208
SHARES
3k
VIEWS
Share on FacebookShare on Twitter

How Your Real Estate Investments Overseas Could Yield You Up To US$195,200 Per Year In Tax-Free Money

If you are living and working abroad and in the business of real estate, you can realize some great tax benefits. I’m speaking of an opportunity for the investor who spends a significant amount of time and effort working his offshore real estate holdings, not someone with one or two rental apartment units.

The typical investor in offshore real estate is able to deduct his losses against other passive income. If you do not have any other passive income, losses are carried forward until you can use them.

However, an exception to this rule applies to a) active participants and b) material participants in the management of offshore real estate.

As an active participant in offshore real estate, you can deduct up to US$25,000 of passive losses against other income (such as wages, self-employment, interest, and dividends) on your U.S. tax return. How do you qualify as an “active participant”? You must share in the management, financial, and operational decisions of the property and be knowledgeable in the day-to-day issues (by reviewing financial statements and other documents produced by the manager, say). This means you should be responsible for arranging for others to provide services such as repairs, collecting rents, etc. You may have a paid manager for the property and still be considered an active participant, so long as you manage that manager.

In addition to qualifying as an active participant, you must also meet these additional requirements:

  • You must own more than 10% of the property…
  • You cannot be a limited partner…you must be a general partner…
  • You must be an active participant in the year of the loss and the year that the loss is deducted.

As I said, you can take advantage of this very interesting tax opportunity if you are either an active participant in offshore real estate or what’s termed a “material participant.” As a material participant, you are much more involved and in control than an active participant. As a material participant (sometimes referred to as a “real estate professional”), you are in the active business of real estate and can deduct your expenses against any and all of your other income without limitation.

It is relatively easy to qualify as an active participant in offshore real estate but more challenging to be classified as a material participant. However, if you qualify, you’ll find that you’re eligible for bigger international tax breaks and loopholes, especially if you’re also living overseas.

Specifically, as a material participant/real estate professional, you can draw a salary from an offshore corporation and qualify for the Foreign Earned Income Exclusion (FEIE). Note, again, that this tax break is available only to material participants offshore and not anyone living or working in the United States. It would be near impossible to qualify as materially involved in properties in Colombia while living in Texas.

Qualifying for the FEIE means that you can take out up to US$97,600 (for 2013; the amount is increased each year) in salary from that enterprise free of federal income tax. And, as a material participant in offshore real estate, you could make use of a number of other tax mitigation strategies, as well.

To be classified as a material participant or real estate professional you must be active year-round in the operation of your offshore real estate business. You must work on a regular, continuous, and substantial basis, and offshore real estate should be your primary occupation. If you work a full-time job and do real estate on the side, you are probably not a real estate professional.

In other words, a qualified offshore real estate professional can deduct his or her expenses against all other income, regardless of source and without limitation and draw out up to US$97,600 in profits free of federal income tax. If a husband and wife both qualify as material participants and for the FEIE, they can each take out an annual salary of US$97,600, for a total of US$195,200 of tax-free money.

Live and Invest overseas Editorial Staff

Continue Reading: Boat Marinas And Dry Storage Facilities In Panama

Comments

Tags: 'real estate'active participantbusinessmaterial participantoffshore investmentTaxes
Share83Tweet52
Previous Post

Roam The World For Free

Next Post

Boat Marinas And Dry Storage Facilities In Panama

Live And Invest Overseas

Live And Invest Overseas

Live and Invest Overseas is the world's savviest source for top opportunities to live better, retire in style, invest for profit, do business, and own real estate overseas. Established in 2008, the Live and Invest Overseas' editors and correspondents have more experience researching and reporting on top opportunities for living well, investing for profit, doing business, and owning real estate around the world than anyone else you'll find.

Related Posts

Beach at Tayrona National Park, Santa Marta, Colombia
Investing

Buying Property Overseas In 2021—Where You Should Look Into And Why

by Kathleen Peddicord
February 7, 2021
0

The world’s best buys on beachfront property in 2021 are to be found in Northern Cyprus, Colombia, Brazil, Mexico, and...

Read more
Modern cityscape skyline of Panama City, Panama.

The Effects Of The Pandemic In Panama: Why You Need To Invest Today

January 25, 2021
Panama City Skyline from Cinta Costera Park, Panama City, Panama.

How Panama Became A Great Economic Success Story

January 19, 2021
Panama City, Panama.

The Real Estate Market In Panama Is Recession-Proof, Take Advantage Of It Now

November 27, 2020
Investments and asset allocation concept.

Diversifying Your Investments And Customizing Your Plan B

November 19, 2020
Businessperson's Hand Holding Arrow Over Stacked Coins With House Models. Real estate investment concept.

How Diversifying Into Real Estate Can Help Your Portfolio

November 17, 2020
Real estate concept with icons of location, contract and price diagram

11 Questions You Need To Ask Before An Overseas Property Purchase

November 15, 2020
Next Post
motor boat

Boat Marinas And Dry Storage Facilities In Panama

A world full of fun, adventure, and profit awaits! Sign up for our free daily e-letter, Overseas Opportunity Letter, and we'll send you a FREE report on the 10 Best Places To Retire In Style Overseas Today.

Start Your New Life Today, Overseas

how to retire overseas

LIOS Resources


  • New To LIOS
  • Ask An Expert
  • Media Center
  • Contact Us
  • FAQs

Quick Links


  • Best Places To Live
  • Best Places To Retire
  • Finding A Job Overseas
  • Real Estate

Sign up for our free daily e-letter, Overseas Opportunity Letter, and get your FREE report: The 10 Best Places To Retire Overseas In 2021

  • About Us
  • Contact Us
  • Privacy Policy
  • Terms
  • Unsubscribe

© 2008-2021 - Live and Invest Overseas - All Rights Reserved.

No Result
View All Result
  • Home
  • Countries
  • Budgets
  • Archives
  • News
  • Events
  • Bookstore
  • Newsletters
  • About Us
  • Members Area
  • Contact Us

© 2008-2021 - Live and Invest Overseas - All Rights Reserved.

WANT TO RETIRE OVERSEAS?

Sign up for our free daily e-letter, Overseas Opportunity Letter, and we’ll immediately send you a free report on the 10 BEST PLACES TO RETIRE in style overseas. Each day you’ll learn about the best opportunities for international living, retiring overseas, offshore diversification and asset protection, and investing in real estate around the world.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.