Estate Issues For Foreign Citizens Owning Property In Florida By Dean Hanewinckel

Foreign visitors to Florida are finding it to be a great time to purchase real estate. Between the favorable exchange rate and the bargain basement prices of Florida properties, the atmosphere for investment is ideal.

However, foreign buyers face a whole set of issues that U.S. Citizens don't. The first issue is probate and estate planning. The United Kingdom doesn't recognize Florida property in its will and probate proceedings. As a result, British citizens must have a Florida will in addition to their estate planning documents in the U.K. Canadian citizens may not need a separate Florida will, but their real estate here will be subject to Florida probate - even if their estate is already probated in Canada.

In Florida, probate is expensive (it can cost between 4% and 8% of the value of the Florida property) and is time consuming. Many foreign property owners wish to avoid Florida probate if at all possible. Some add their children's names on the title of the property. While this may create a right of survivorship, meaning the property automatically passes to the remaining owners on the death of one; it can create other problems. All owners are required to sign a deed transferring title or a mortgage. This could be cumbersome and difficult to arrange. If one of the children is involved in a lawsuit and a judgment is entered against him, it could become a lien against the Florida property. And in the event of a divorce, the child's spouse may obtain an interest in the property.

Another issue is incapacity. If one of the owners of the property becomes incapacitated, the property cannot be sold or mortgaged without a costly, emotionally painful and time consuming guardianship proceeding.

Finally, the foreign property owner must deal with U.S. Federal Estate Tax. Upon the death of a foreign owner of Florida property, that owner's estate (or the portion located in the United States) would be subject to Estate Tax beginning at 35%.

For Canadians, this means if the deceased Canadian owns more than $60,000 of U.S. assets, his estate would be subject to U.S. estate tax. U.S. citizens get a $5 million exemption meaning they do not pay any estate tax on the first $5 million of their estate. Foreign property owners get a pro-rated exemption based on the value of their worldwide assets. A Canadian dying with worldwide assets of $2 million who owns a home in Florida worth $200,000 would receive an estate tax exemption of $500,000 under the current estate tax law ($200,000 is 10% of $2 million so the Canadian would get 10% of the $5 million exemption granted a U.S. citizen).

For U. K. citizens, transfers to a non-U.S. citizen, even a spouse, will result in estate tax unless advance planning is done. U.S. citizens can pass an unlimited amount to a spouse at death - called the marital deduction. Transfers to non-U.S. citizen spouses are subject to Estate Tax unless the transfer is made to a Qualified Domestic Trust, a special trust that requires that the property or its proceeds always remains within the jurisdiction of the IRS.

Corporations are one way to avoid the negative effects of the issues above. However, a corporation is subject to a capital gains rate of 40.5% as opposed to 15% for individuals and most trusts.

All of the issues mentioned above, probate, incapacity, estate taxes and capital gains taxes, can be successfully addressed by a revocable trust. Because of the unique issues involved, this revocable trust will be different from one prepared for a U.S. citizen.

For more information about issues relating to Florida residency, visit http://www.newfloridaresident.com. Dean Hanewinckel is an attorney in Southwest Florida who has helped his clients with Florida residency issues since 1984. He is the author of 2 books, Manifest Your Legacy and The Official Snowbird's Guide To Becoming A Florida Resident.

Life Annuity Investment Property By Joe Toner

In France, the sale of a life annuity investment property is based on the following principle: the property's price is computed and determined as with any normal real estate transaction. This price is then paid in part immediately in what is referred to as "the bouquet", and the unpaid portion is converted into a life annuity.

The annuity amount is calculated using mortality rates tables and thus is dependent on the age of the seller. The annuity, also known as "arrears", is to be paid by the buyer (debtor) starting as of the date of sale until the death of the seller (creditor).

Therefore, a life annuity transaction forms an uncertain contract since the total amount of the price paid by the buyer could end up being either less or more than the actual value of the property depending on the date of death of the seller.

Why buy a life annuity property?

This investment method allows you to own a property for a low initial cost (the bouquet) relative to the overall value of the property without having to go through a bank. In return, you are subject to an variable contract based on the lifespan of the seller, since its expiration can not be defined at the outset unlike standard loans.

You will then become the annuity debtor and, as such, you will pay rent to the seller (the creditor), the same way that a buyer would make his/her loan payments. "Many expatriates prefer this type of investment," said a real estate professional. They opt for this type of transaction such as by buying their future home in Paris or any other region in order to recuperate the property upon their return to France; in fact, many Parisians also purchase property on the Cote d'Azur via this method.

Although this market remains confidential, we are starting to see more advertisements for such properties on the Internet (i.e. viager-libre.fr, solutionviager.com, viagers-occupe.fr), and some real estate firms even specialize in this type of sale.

What about taxes and fees?

The payment of condominium fees depend on the agreement between the parties. In general, they follow the same procedures as with standard leases; therefore, the seller will pay for all maintenance work and minor repairs and the buyer will be responsible only for major repairs. Similarly, the seller will only pay the housing tax, while the buyer will pay the property tax. It is also important to note that the rent paid to the creditor is not tax deductible

Why Invest In Apartment Buildings - Step By Step By Darin Garman

Have you ever wondered, "Why should I invest in apartment buildings?" Have you ever thought you would like to get involved with an apartment investment, but did not know all of the benefits?

I have invested in many different types of residential, apartments, and commercial real estate over the years, and apartments are by far my favorite type of investment.

Here are my Top 3 Reasons to Invest in Apartment Buildings:

Reason #1. Multiple Streams of Income

By investing in apartments, you can actually create several streams of income - simultaneously from a single investment. There is no other investment option that I know of that can provide this kind of benefit without extreme risk to go along with it.

If you look at the financial statements from an apartment building, you will actually find 4 different streams of income - simultaneously working together:

1) Cash Flow
You will receive cash flow both now, and when you sell.

2) Appreciation
Your property can appreciate both organically (over time) as well as through good property management.

3) Principal Reduction
Your residents will pay down your mortgage balance every single month.

4) Tax Benefits
You get the benefits of depreciation expense, as well as being able to reinvest the profits without paying capital gains.

Reason #2. Predictability

"People will always need a roof over their heads." I have heard this statement many times when I first started investing in apartment buildings, and it still holds true today. Even more so.

When the economy is in bad shape, do you think people are more likely to let their office space go that their company is renting, or the apartment that they live in? It's pretty obvious, right? Just look around at the number of vacant office and retail buildings (no matter what market you are in) and you will see why commercial space can be more difficult - and less predictable.

A poor economy is actually a benefit for apartment buildings because of the lack of affordable housing and credit availability. Apartment owners provide a valuable service to our residents because they need a safe, clean, affordable place to live.

Reason #3. Control

There are several forms of control that I like about apartment investments:

1) The ability to invest how I want.
You can invest on your own, in a partnership, or in a group investment. You can choose the type of properties I will invest in, and their locations.

2) The ability to invest when you want.
You are not bound by any terms and conditions of a stock or mutual fund trading account. You can choose when to buy, and what to buy.

3) The ability to invest and have someone else manage the day-to-day operations.
The apartment business is one where you can have everything managed for you from the start - and you do not have to reinvent the wheel.

4) The ability to increase property value.
This is probably the #1 control reason I like. This is because with an apartment building, you actually control the property value by affecting the Net Operating Income of the property. You can quickly and easily add value to the property - both in cash flow and future value, as well.

By the way, if you liked this article, you will probably like my new report and video series, "The 7 Biggest Mistakes Investors Make When Buying Income Property."