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Old 02-16-2014, 07:07 AM
 
Location: Simmering in DFW
6,952 posts, read 22,620,838 times
Reputation: 7295

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In the US any person can "gift" another person about $12,000 annually and the recipient doesn't have to declare it as income. Under this gifting allowance, all kinds of handy deals occur. Example, my own son has an interest free mortgage from me and the interest payment he would pay at market rates are about that amount, so we keep records to show the values and that the amount is gifted.

I don't know the financial clauses offered to citizens in your country but if you have something equivalent, perhaps you can declare her rent as a gift to you if, in fact, you take the position that you own the condo as a alternative residence and she is staying there as a guest. If you are audited, this might work if you can prove you are not declaring the unit as an investment in the US, but as a second residence. Again, this only is an idea that has merit if your tax system allows tax free gifting.

By the way, in the US, you will not be able to get any tax advantages as an owner/ landlord because you are renting to family. So you must pay property taxes on the condo, but cannot get any deductions for it as a rental property.
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Old 02-18-2014, 10:02 AM
 
10 posts, read 20,753 times
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OK, OK guys, it has been decided to go "by the book" (a saying we have in Israel - that means to do everything as should be done)

If it makes some of you feel better, I was trying to think of ways to avoid paying taxes in Israel and not to USA, but anyway that was ruled out as well.

I do have another question and am hoping to as much feedback:

I am buying my first small property in the USA now, without a mortgage. I might consider buying some more in the future (with mortgage).

1. If I buy another property in the USA, will I be required to pay some additional taxes, because I already have one property?

2. Will it be easier for me to get mortgage? will I get better terms for the mortgage? - lower percentage etc.?

3. Anything else that might be relevant.

Thanks !

Bazani.
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Old 02-18-2014, 10:34 AM
 
10 posts, read 20,753 times
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Thumbs up Squirl - some more questions please!

Quote:
Originally Posted by Squirl View Post
In the US any person can "gift" another person about $12,000 annually and the recipient doesn't have to declare it as income. Under this gifting allowance, all kinds of handy deals occur. Example, my own son has an interest free mortgage from me and the interest payment he would pay at market rates are about that amount, so we keep records to show the values and that the amount is gifted.

I don't know the financial clauses offered to citizens in your country but if you have something equivalent, perhaps you can declare her rent as a gift to you if, in fact, you take the position that you own the condo as a alternative residence and she is staying there as a guest. If you are audited, this might work if you can prove you are not declaring the unit as an investment in the US, but as a second residence. Again, this only is an idea that has merit if your tax system allows tax free gifting.

By the way, in the US, you will not be able to get any tax advantages as an owner/ landlord because you are renting to family. So you must pay property taxes on the condo, but cannot get any deductions for it as a rental property.
Hi Squirl, I was very happy to read your reply. Despite deciding to withdraw from my previous intention, your answer has caught my attention, and I would like to make clear a few points.

1. If she will deposit each month to my account the rent, is it enough for her to display later for mortgage purposes? Me and my sister have the same family name, so will it raise more suspicious?

2. I am visiting Florida once a year at most, is it enough to be eligible to own a second residence?

3. Am I allowed to have a second residence in the USA, If I don't have USA citizenship/social security number/work permit? What else does "second residence" means? does it mean I need to be there a certain amount of time per year or something? How about when Selling the property?

4. Which Tax advantages did you mean? I am talking about income taxes and not property taxes that needs to be payed to the USA regardless of If the property is for investment purposes of as a second residence.

5. I would like to turn to a professional with these questions while I'm in the states. Who is the most suitable for these kind of questions: a lawyer or an Account manager? (I will also discuss this of course with my Israeli Account manager who specializes in investments in real estate in the USA - but I didn't get him to answer some advanced questions and couldn't find a better one.)

I am looking forward for your reply,
Thanks a lot,

Bazani
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Old 02-18-2014, 07:00 PM
 
Location: Simmering in DFW
6,952 posts, read 22,620,838 times
Reputation: 7295
1. If she will deposit each month to my account the rent, is it enough for her to display later for mortgage purposes? Me and my sister have the same family name, so will it raise more suspicious?

If your sister can show monthly payments to you, and also if you draw up a simple lease, she will have good evidence to support that she pays rent.

2. I am visiting Florida once a year at most, is it enough to be eligible to own a second residence?
I don't know the answer! Also, don't know if it matters if its a 2nd residence in your case

3. Am I allowed to have a second residence in the USA, If I don't have USA citizenship/social security number/work permit? What else does "second residence" means? does it mean I need to be there a certain amount of time per year or something? How about when Selling the property?
When I referred to a 2nd residence, it was in reference to mortgage and insurance status, it probably means nothing in your case.

4. Which Tax advantages did you mean? I am talking about income taxes and not property taxes that needs to be payed to the USA regardless of If the property is for investment purposes of as a second residence.Owners of investment properties in the US get tax advantages, there are tax deductions that can be made for repairs, maintenance, travel to check up on the property, other things. These deductions help to offset profit when declaring rental income. However, renting to family is not permitted as far as getting income tax deductions on rental property

5. I would like to turn to a professional with these questions while I'm in the states. Who is the most suitable for these kind of questions: a lawyer or an Account manager? (I will also discuss this of course with my Israeli Account manager who specializes in investments in real estate in the USA - but I didn't get him to answer some advanced questions and couldn't find a better one.)
I recommend you seek out a CPA (tax accountant) or tax attorney who specializes in rental property. The CPA would cost less.
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Old 02-19-2014, 05:41 AM
 
Location: The Ranch in Olam Haba
23,709 posts, read 30,615,731 times
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Quote:
Originally Posted by bazani View Post

5. I would like to turn to a professional with these questions while I'm in the states. Who is the most suitable for these kind of questions: a lawyer or an Account manager? (I will also discuss this of course with my Israeli Account manager who specializes in investments in real estate in the USA - but I didn't get him to answer some advanced questions and couldn't find a better one.)
Contact BKB at the Azrieli Center. This office should be able to assist you.
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Old 02-20-2014, 10:01 AM
 
10 posts, read 20,753 times
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Default Squirl - thanks!!

Thanks, you're a true pro.
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Old 02-20-2014, 10:33 AM
 
Location: Southern California
4,453 posts, read 6,771,672 times
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You went around this all wrong:

1) you should've started in the Mortgage Forum rather then the renting forum.

2) Instead of trying to avoid paying income tax in your home country your sister should talk to other lender. If your country, if you let your sister live for free does it have to count as income tax?

Taxes - You pay taxes on things your own and money you make. If you own property, you pay property taxes. If you make money from the property, you pay income taxes. Where you live, citizen status, etc, doesn't matter.

Don't complicated things with 2nd residences yet, you should be talking with a lender in the states which you want to purchase the properties. Lending programs vary from state to state. We have programs in California which may not be available in Florida, it is hard to say what can and can't be done without knowing where your 2nd property would be purchased.

Tax advantage in the states translates to losing less money, the more you spend the more you save mentality, the more you lose the more you will get back in taxes.

1st home 2nd residences is too complicated to discuss in your case in a public forum feel free to send me a private message if you want to discuss my opinion. I've met other people that own property in California and Israel and the are still able to buy property in California.
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