Don’t let this oversight wreck your offshore dreams

Are you thinking about buying a vacation or retirement home overseas? Milder climate, lower cost of living, and a sense of adventure are only a few of the reasons U.S. citizens are looking to spend time beyond our shores. But before you take that step, you should understand what the IRS has in store for you if you ignore its rules.

In some countries, such as Costa Rica, you might be advised to set up a corporation to buy and hold the property. And that’s where the IRS steps in …

U.S. citizens 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. You would then include this form with your federal tax return.

Suppose didn’t know about that requirement or figured it’s just a home with no income so it’s not a big deal.

Wrong!

The truth is you could be facing a $10,000 penalty for each year you miss filing the form. 

You can go to the IRS’ website (www.irs.gov) and search for more information. And be sure to get a CPA or tax attorney who knows our tax code inside and out before you close on your offshore dream home.   

How to pay for rising LTC premiums

Are you considering buying a long-term care insurance policy? Hopefully you’ve done your homework to make sure such a plan is right for you. And don’t forget … premiums are sure to rise … simply because long-term costs continue to rise.

According to the insurance giant Genworth, the average annual cost of a semi-private room in the U.S. $80,300; and a private room will run you $91,250. The 5-year annual growth for both is 4 percent.

One idea is to set aside money in an account that includes quality dividend-paying stocks or mutual funds to help pay for any premium hikes. The average dividend yield for the S&P 500 is approximately 2 percent. Bonds, bond mutual funds, or real estate investment trusts (REITs) could boost that yield even more. Contact your financial advisor on the best way to structure this account. 

Would you like other funding ideas for your long-term care needs? Then click here to get a copy of A Boomer’s Guide to Long-term Care. It’s available for immediate download to your Kindle or in a paperback version. 

Chain-smoking tenant cost landlord $11,000

Do you allow tenants to smoke? If so, you should click here to learn why a tribunal in Sydney, Australia ordered a landlord to pay more than $11,000 to a tenant whose flat was made unlivable. 

Tenant’s car must go!

I’ve had tenants who drove cars and work trucks that were genuine clunkers. But as long as the vehicles had valid tags and ran, I never made a big deal of it.

However, one landlord apparently isn’t as open-minded as me … 

Fath Properties in Ohio is threatening legal action if a tenant doesn’t get rid of her rusty car. Click here for the full story and a picture of the amount of rust on the car. 

It doesn’t look that bad to me. What do you think?

Banks create thousands of opportunities for real estate investors

Banks seized 133,811 homes in the U.S. during the third quarter of this year, roughly the same as in the second quarter. But the number spiked by 66 percent compared to the year before. 

A lot of these properties have been in default for a long time and are likely vacant. That means they may eventually sell at discounted prices that drag down overall home prices in their markets. These thousands of foreclosed homes may also provide an opportunity for investors. And according to RealtyTrac many of these homes will be hitting the market for sale in the next six to 12 months. 

IRS has good news for long-term-care policyholders

In A Boomer’s Guide to Long-term Care I included a chapter on how your long-term-care premiums might be deductible. The IRS recently announced an increase in those deductibility limits for 2016.

The limits depend on your age and range from $390 to $4,870. 

You can read the details here.