Buying a condo, should a "foundation" own it? Tax question.

Hi, I am buying a condo in PC and my Panamanian lawyer says I have to decide whether to purchase it in my name or to have him set up a foundation, which apparently is very common. My specific question is about tax implications in the US where I am a taxpayer. I will probably rent out the condo at least part time (>45 days at a time, in keeping with short-term rental regs in PC). I have searched a lot here and elsewhere and I understand how the IRS treats overseas real estate investments in general, but nothing specifically about whether anything changes if held by a foundation in my benefit. Would expenses be deductible, would I have to take depreciation , etc, as with a property held in my personal name? Anyone have experience with this? Or know a reputable expert? Thanks!
KBOS

this foundation option is bogus
lawyers will tell you any fairy tales to make a buck
go to the registro-publico and the municipio in PC
there are some english speaking employees

Put it in your name... better yet... don't buy...

KBOS   12 February 2018 22:13:00

When exploring the purchase of property in Panama, one has the option of owning in three ways.  You can own the property under your personal name or use one of two structures:  A Panamanian corporation or Private Interest Foundation, depending on your needs.

The primary advantage of holding property under one of these structures is mainly based on estate planning purposes as it is important to consider the eventuality that owner (or one of the owners if the property is under both spouses names) passes away or becomes mentally incapacitated, as their heirs will have to file a succession process in Panama (through a court of law) which would cost considerable time and money. If the property is under a corporation or a foundation, it is very simple to make arrangements for your assets to go directly to whomever you designate.
Another important advantage to having your assets under a structure is due to lawsuits. In case someone wants to sue you, they would not be able to go after your property, as it will not be owned by you, but by a Panamanian company or a Private Interest Foundation.

Keep in mind that U.S. citizens have to declare income on all money earned in foreign jurisdictions. So please consult an accountant or a lawyer before purchasing the Panamanian Company or Private Interest Foundation.

You should contact a tax attorney in USA regarding your questions on tax liabilities. I wouldn't take any tax advice from an open worldwide forum...

I had multiple Panama corporations and a Panama foundation for no good reason.  (I was planning on multiple investments at the time.)  My goal was not tax evasion - privacy of ownership to protect against spurious lawsuits and ease of transfer with no Panama probate (simply transfer shares of the corporation).  Despite only having a forfeited deposit, the tax filing required a complete accounting of the corporation's financial activities and owners.  Take a look at this form (Form 5471) and you'll see what your reporting requirements are regardless of the fact that the Panama corporation has no U.S. taxpayer number.  From the IRS:

U.S. citizens and U.S. residents who are officers, directors, or shareholders in certain foreign corporations are responsible for filing Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations. The form and attached schedules are used to satisfy the reporting requirements of transactions between foreign corporations and U.S. persons. Substantial penalties exist for U.S. citizens and U.S. residents who are liable for filing Form 5471 and who failed to do so.

The categories of U.S. persons potentially liable for filing Form 5471 include:

    U.S. citizen and resident alien individuals,
    U.S. domestic corporations,
    U.S. domestic partnerships, and
    U.S. domestic trusts.

The filing requirements for Form 5471 relate to persons who have a certain level of control in certain foreign corporations as described on pages 1-3 of the Instructions for Form 5471. Please refer to those instructions for the details about who is liable for filing Form 5471.

Form 5471 should be filed as an attachment to the taxpayer’s federal income tax, partnership or exempt organization return, and filed by the due date (including extensions) for that return.


Link to article and Form 5471:

https://www.irs.gov/individuals/interna … -form-5471

https://www.irs.gov/pub/irs-pdf/f5471.pdf

Consult with a lawyer. We have a Foundation for our property. Saves a lot of legal hassles and ensures your spouse or heirs gets the property.

These guys are superb:

http://www.lawandrealty.net/

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