Corporation to hold real estate

[carialter]

Hi
All the entries I found are really old. I’m wondering if there’s anything new going on what with all the new laws and new climate in the U.S.?

There is a corporation that holds a piece of undeveloped property I own. The property does not make any income. I am not trying to avoid taxes. They said I need to hold it that way so if I ever want to sell it, it would be easy.

I don’t want to do anything illegal in the U.S. Anyone know if this is ok as is?

Thanks for your help,
Cari

[DavidCMurray]

You must report annually to the IRS your ownership or control of any interest in any foreign corporation. For a corporation that has no financial activity, it’s a minor aggravation.

And . . . Lest anyone forget, you must also report to IRS any non-U.S. bank account you have IF that account fphas a balance of $,10,000US or more at any moment during theyear, even if it has that balance for just one second. Again, it ain’t no big thing.

[elindermuller]

Don’t forget to pay the new corp.tax in Costa Rica.
Plus the “timbre de cultura”

After 20 years in Costa Rica and dealing with property issues, I can not really see advantages of holding a property in a corp. and it is not a MUST. Many people have their homes or land in their personal names.
If you sell the corp. including the property, you don’t pay the property transfer tax, but now that they are charging that yearly corp.tax, this adds up to a nice amount too after a few years.

Plus, even if you have a “sociedad anonima” nowadays you can not really hide anything, except you are not an officer on your own corp.

[skilligan]

[quote=”elindermuller”]Don’t forget to pay the new corp.tax in Costa Rica.
Plus the “timbre de cultura”

After 20 years in Costa Rica and dealing with property issues, I can not really see advantages of holding a property in a corp. and it is not a MUST. Many people have their homes or land in their personal names.
If you sell the corp. including the property, you don’t pay the property transfer tax, but now that they are charging that yearly corp.tax, this adds up to a nice amount too after a few years.

Plus, even if you have a “sociedad anonima” nowadays you can not really hide anything, except you are not an officer on your own corp.[/quote]

this i find a little confusing, Is the only benefit to have your property in a corp. to avoid property transfer tax and keeping your home government from knowing about your foreign investment so they can tax you? Pls, excuse my ignorance on the subject, I’ve read that relationships between Canada and CR have changed so that they’re able to see if Canadians have foreign investments presumably so they can tax you on it.

I’m struggling to understand why i should spend the money on a corp. as apposed to having it in my name? Seems like a lot of extra work!

[Ballonfish]

With our land property, we have an SRL corp. (LLC). We have designated it as a foreign entity classified as a partnership (form 8832). No 1065 needed yet because it is non-income producing and not connected with any US business. If you build/buy and do rentals for income, then that income will be treated differently than your ordinary personal income tax rate. Also, if you sell your property, the capital gains will be taxed at a lower rate. This may make a difference with the Obama tax increases looming next year. If you decide to use a CR corp. and are a US resident, highly recommend hiring an accountant to handle necessary filings. Too many gotchas now and governments sharing info and mostly just aggravating paperwork like David M. said above. Check out this cpa’s blog. He helped us get things properly set up.

http://fideicomiso.wordpress.com/

or this guy…http://www.usexpatriate.blogspot.com/

However you decide, research, hire professionals, and follow in the steps of giants with the proper structure.

Also, paid $180 CR corp tax for inactive SRL.

[elindermuller]

[quote=”skilligan”][quote=”elindermuller”]Don’t forget to pay the new corp.tax in Costa Rica.
Plus the “timbre de cultura”

After 20 years in Costa Rica and dealing with property issues, I can not really see advantages of holding a property in a corp. and it is not a MUST. Many people have their homes or land in their personal names.
If you sell the corp. including the property, you don’t pay the property transfer tax, but now that they are charging that yearly corp.tax, this adds up to a nice amount too after a few years.

Plus, even if you have a “sociedad anonima” nowadays you can not really hide anything, except you are not an officer on your own corp.[/quote]

this i find a little confusing, Is the only benefit to have your property in a corp. to avoid property transfer tax and keeping your home government from knowing about your foreign investment so they can tax you? Pls, excuse my ignorance on the subject, I’ve read that relationships between Canada and CR have changed so that they’re able to see if Canadians have foreign investments presumably so they can tax you on it.

I’m struggling to understand why i should spend the money on a corp. as apposed to having it in my name? Seems like a lot of extra work![/quote]

This is what I am saying. No advantage if it is only holding property. Some people say, if you have an accident and kill somebody, they can´t take your property if it is in a corp. because they don´t know that you are the owner/shareholder. Well, they can find out pretty fast. If you are on the board of directors (probably be the president) even I can find out in less then one minute in which corp you are registered and if this corp. has property. Then they (judge) can claim the books where the shareholders are written into and there they got you. Maybe there are some costarican lawyers in this forum who can clarify that, indicating the regarding laws.

An advantage of a corp would be if you have an income producing business, you may want to put it into a corporation because your private assets are save, which means (if I understand right) if your company goes downhill, your creditors can´t take your house that is in your personal name, for example).

One attorney said that, if you have a corp and you die, there is no Estate, Succession Process or Probate required. Well, I have a different experience. I helped a friend through the whole process (after her husband died) and it took more than a year and $ 5000 attorneys fees to get his shares transferred over to her, plus to make her president (she was secretary and had no POA).

[davidd]

here is the one sentence that pretty much sais it all

[size=200][size=][b]follow in the steps of giants with the proper structure.[/b][size=][/size][/size][/size]

[Author]

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