Americans Are Buying Offshore

A few weeks back I noted that a  large number of American citizens are leaving the good old U.S.A. for new homes abroad.

A 1999 U.S. State Department survey says 4.1 million Americans lived overseas then. In past years the estimate has been that each year about 250,000 U.S. citizens and resident aliens leave America to make a new home in some other nation. In 2005, the U.S. Bureau of the Census upped this estimate to over 350,000 U.S. citizens and resident aliens leaving the United States permanently each year.

Now comes the U.S. National Association of Realtors (NAR) with an extensive study of official U.S. data sources with the express goal of finding out about Americans who not only live offshore, but are buying new or second homes in foreign countries such as Panama, Mexico and even Switzerland.

To begin to answer the question – what is the level of foreign home buying activity by U.S. citizens and permanent residents – NAR commissioned a study of measurements of those Americans moving, working and/or living abroad and whether or not they purchased a residential property in foreign countries.

The NAR examined several possible indicators of trends including U.S. State Department data on the numbers of Americans living abroad, Social Security Administration data on the number of American retirees collecting Social Security benefits abroad, (yes, those checks keep on coming abroad), and Internal Revenue Service statistics on the number of tax returns claiming the foreign earned income income exclusion, ($72,400 tax exempt for qualifying Americans working offshore).

Hundreds of Thousands Abroad

The NAR data showed some interesting factoids: 
* The analyzed data suggests that there are possibly as many as 500,000 to 600,000 foreign properties owned by Americans living abroad.
* Analysis of retired American workers living abroad suggests their ownership rate is likely to be in the range of 54,000 to 63,000 properties.
* U.S. workers working abroad and filing IRS Form 2555 (foreign earned income exclusion), suggests that their foreign home ownership rates are probably in the range of 80,000 to 100,000.

Comparison of the estimates from the retirees (based on Social Security data) and those working abroad covered in the State Department base, suggests that American demand for offshore vacation and short-stay foreign properties may be in the range of 370,000 to 440,000 units. Overall, this suggests approximately 150,000 foreign properties owned by retirees and Americans working in a foreign country.

Non-Reportable

Direct ownership of real property in a foreign country, including a time share arrangement, is not a reportable foreign account as defined in U.S. Treasury Form TD F 90-22.1. However, real estate holdings are generally a matter of public record in the country in which they are located and cannot be liquidated easily. If you own the real estate through a holding company or trust, that entity probably will be required to file its own U.S. disclosure and tax forms.

If you wish to purchase and hold real estate in a foreign country without disclosing your ownership, you can do that by placing title in an international business corporation (IBC), trust or family foundation located in a nation, such as Panama, where beneficial ownership does not have to be disclosed. And your IBC or trust does not have to be registered in the same nation where the real estate is located.

One segment that was not analyzed by the NAR was the number of Americans still residing in the U.S. who own properties in North American, Caribbean or Central American countries. This is likely a substantial number, given the easy access to countries in these regions through air transport or even automobile. These figures could substantially add to the overall totals.

Conclusions

The NAR study shows that Americans abroad tend to be located close to America. Both Canada and Mexico are familiar and close to home. The Caribbean islands have become popular vacation areas for Americans as well as the home of many offshore corporations. The Dominican Republic, with 82,000 Americans abroad, exceeded all of the individual countries in Central and South America.

Brazil, Colombia, Argentina, Costa Rica and Panama have property ownership potential for many Americans, with Panama being the only one of these having in place an official program of tax breaks and discounts to attract foreign residents.

* To find out all about the possibilities of your owning offshore real estate, for a new home, second home or retirement, click here:
http://web-purchases.com/190SGOPS/W190H721/