Owning Foreign Real Estate By Yankees

[Thaiquila]

This is of Yankee interest only, and if you are not a Yank, be glad you don't have to deal with the US IRS!

In case you didn't know, you are required to report any foreign bank accounts to the IRS, no matter the size.

Apparantly the penalties for not reporting this are ridiculously severe.

I am now wondering if you also must report ownership of foreign real estate such as condos in Thailand. Does anyone know the rules about this and have experience reporting this, or perhaps you don't have to report this.

I am not talking about if you get rent income, obviously that is reportable. I am talking about just owning something for personal use.

Edited February 28, 2005 by Thaiquila

[Dakhar]

Not sure what the answer is... I think it would be yes.

But lets paint a fuller picture... Are you married to a Thai? Is the land/home under her name? Is you marriage officail with the Thai govt? Does your wife have a Thai tax ID#?

Other curious question, lets say you are married to a Thai, and she does have a tax ID number, and you marriage is official.... Still, there is no way possible you will ever own the land/house etc. due to Thai laws... so why would you have to pay tax?

[lopburi3]

You do not have to report any details or a foreign bank account (other than you have one) if under $10,000. The TD F 90-22.1 report is only required when it goes above at some point during the year.

Can not imagine any reason you would report a house or property or where you would report it but admit I have never checked it out as not a land owner.

[Dakhar]

Lopburi3

My accountant has also said the same in reg. to the 10K.

I'd be using the saftey deposit box methodology IF I had the need.

[paulfr]

Reporting land/property to the IRS is not necessary as far as I know.

Of course if you sell the land or house and make a profit, they want to know about that capital gain. But even then, if it is a primary or secondary residence and your profit/capital gain is less than 250K$ (500K$ if married), you do not even need to report the sale at all. I sold a house last year and was quite surprised when I read this right in the 1040 Instructions.

If you are being audited, then that is another matter and lying is tax fraud for which the statute of limitations do not apply.

[thaihome]

You do not have to report any details or a foreign bank account (other than you have one) if under $10,000.  The TD F 90-22.1 report is only required when it goes above at some point during the year.

Can not imagine any reason you would report a house or property or where you would report it but admit I have never checked it out as not a land owner.

<{POST_SNAPBACK}>

You must list all foreign bank accounts if the aggregate total is over 10K:

Who Must File this Report: Each Unites States person, who has a

financial interest in or signature authority, or other authority over any

financial accounts, including bank, securities, or other types of

financial accounts in a foreign country, if the aggregate value of

these financial accounts exceeds $10,000 at any time during the

calendar year, must report that relationship each calendar year by

filing TD F 90-22.1 with the Department of the Treasury on or before

June 30, of the succeeding year.

At one point couple of years ago, I had accounts in 4 countires, only one of which was over 10K, I had to list all 4.

TH

[hugobkkboss]

seems like this 10k thing is a bit much. what are they gonna do to you. been filing the 2555 ez form for years and show decent income but have never filed the 10k form

[thaihome]

seems like this 10k thing is a bit much. what are they gonna do to you. been filing the 2555 ez form for years and show decent income but have never filed the 10k form

<{POST_SNAPBACK}>

You should note that this is not filed with your tax return. It is sent to directly to the Department of the Treasury by June 30 of each year.

[Thaiquila]

seems like this 10k thing is a bit much. what are they gonna do to you. been filing the 2555 ez form for years and show decent income but have never filed the 10k form

<{POST_SNAPBACK}>

We are talking SEVERE PENALTIES.

And those are dollars, cheapened as they may be, not baht.

Welcome to the new, "friendlier" IRS.

You are not going to believe what you read here.

Apparantly, the penalties were devised by the Marquis de Sade:

The Secretary of the Treasury may impose a civil penalty on any person who willfully violates this reporting requirement. The civil penalty is the amount of the transaction or the value of the account, up to a maximum of $100,000; the minimum amount of the penalty is $25,000. In addition, any person who willfully violates this reporting requirement is subject to a criminal penalty. The criminal penalty is a fine of not more than $250,000 or imprisonment for not more than five years (or both); if the violation is part of a pattern of illegal activity, the maximum amount of the fine is increased to $500,000 and the maximum length of imprisonment is increased to 10 years.

from: http://www.taxmeless.com/TDF90221.htm

Edited March 3, 2005 by Thaiquila

[lopburi3]

You are right if you have a number of accounts then it would be the total that determines that you need to report - I only have one so was not thinking of that so thanks for pointing it out.

As for the penalties the law is designed to be a last ditch method to catch organized crime figures and those not in that category would probably never come onto the radar screen; much less be faced with the penalties in full. You will note that it has to be "willful".

[JimGant]

As for the penalties the law is designed to be a last ditch method to catch organized crime figures and those not in that category would probably never come onto the radar screen; much less be faced with the penalties in full. You will note that it has to be "willful".

Good point. As long as you're reporting all your foreign earned income, as required, you're not 'willfully' trying to hide the existence of these income-producing accounts. So, not to worry, as you're not costing Uncle Sam a dime. This is in the same category as 'you're going to be fined big time for failing to file your income tax form. 'Yeah, ok, I forgot to file, but I overwithheld, so you owe me. What's the fine going to be?' Even the IRS has to consider 'intent.'

Plus, the chance of getting audited these days is minimal. Taxpayer Compliance Audits, where you're randomally selected then grilled extensively on everything, are still on hold, as far as I know. Plus, when the US and Thailand signed their mutual tax treaty a few years back, it was understood that Thailand was then unable to comply with 'required' accounting to the US. They were supposed to have met this requirement by now, but don't think they have. Think about it -- does anything you've done financially in Thailand have your US taxpayer ID (usually, your Social Security number) on it? Probably not, so the US can't do any effective cross-linking.

Still, even if you're not reporting your 500 bht bank account interest to the IRS, it might be worth your while to do so in case Thai authorities question why you're not paying Thai taxes on this. By itself, you're well below Thai threshhold for income taxes -- but do they look at worldwide income to determine threshhold? Dunno. But if you can show you've paid US taxes on this, then you're home free per tax treaty.

But all this is secondary to the real worry -- where can I buy a beer between 2 and 5PM?

Edited March 3, 2005 by JimGant

[ProThaiExpat]

Jim Gant: Thanks for putting some perspective to the initial draconian posts regarding reporting of foreign bank accounts.

My U.S. Tax Return is prepared by a CPA and tax expert and he has never advised me regarding this "regulation".

I do notice that the quoted regulation speaks of $10,000 that is U.S. Dollars.

Does anyone know for certain if the regulation speaks of a foreign bank account "with a sum equivalent to $10k"

It seems to me that the U.S. Treasury regulation regarding all banks reporting U.S. dollar transactions of 10k or more falls into the category of enforcement of money laundering.

It seems to me that every U.S. retiree in Thailand who has the required 800k baht in a Thai bank at the time of obtaining his retirement extention would be in violation of this regulation unless he reported in the event the regulation speaks of "U.S. dollar equivalent accounts" as opposed to accounts denominated in U.S. Dollars, which seems a more reasonable interpretation of the regulation quoted.

Anyone know the answer to the question?

[lopburi3]

Item 22 of the form gives instructions for converting from foreign currency to US$. It is the rate at the end of each quarter or yearly if not reported by quarters.

So yes, anyone with 800k in a Thai bank account at any time during the year must file a form TD F 90-22.1 and it can be downloaded in PDF format. That is the reason I mentioned it in passing as I was not aware of it until someone mentioned in a forum a few years ago (but had never been above up to that time).

[ProThaiExpat]

Lopburi3:

Many thanks for this information, completely new to me. I bet my daughter, living in Australia, doesn't have a clue, either.

Seems easy enough to comply, with no downside for law abiding citizens.

My guess is that it is complied with by less citizens than those who do comply, undoubtedly due to ignorance, not willful non-compliance, as in my case.

Thanks again!!