Real Estate Tax Tip for Foreign Investors in 2018

When purchasing real estate in Florida a good idea is to form an off shore corporation as sole shareholder of one or several US Corporations. This allows the foreign investor to take advantage of the lower corporate income tax rates that will hold the properties. The foreign Corporation, as a ” Holding Company”, is the sole shareholder allowing the foreign investor to take advantage of the low rates of maximum 21% upon sale of the property with no future US income taxes upon liquidation. It also allows the foreign investor a safe harbor from estate tax that could cause the family of a individual foreign investor to loose their US interest in the case of a sudden death. The low exclusion bracket for foreign individual investors is dangerous and this is a must for foreign investors.

Real estate investors should look good and hard for those deals!

IRS Watch Released an Accounting Today Article of The Release of Updated Tax Tables by The IRS for 2018

I received an update from IRS Watch this morning that addresses the issues I discussed about tax tables and the accuracy of them for the 2018 tax changes. It quotes an article from Accounting Today, it reads as follows….

The Internal Revenue Service released updated tax withholding tables for 2018 Thursday to reflect changes for the Tax Cuts and Jobs Act, amid warnings that the tables may not be accurate and will need further refinements.

Notice 1036 is only the first in a number of steps the IRS intends to take to improve the accuracy of withholding after the major changes in the new tax law, the service cautioned.

Among other things, the new tables reflect the increase in the standard deduction, the repeal of personal exemptions, and changes in tax rates and brackets.

IRS headquarters in Washington, D.C.
“With this guidance, most American workers will begin to see bigger paychecks. We estimate that 90 percent of wage earners will experience an increase in their take home pay,” said U.S. Treasury Secretary Steven Mnuchin in a statement. “The administration’s monumental tax reform legislation continues to provide economic benefits for hard-working Americans. These tax cuts will ensure that American workers are able to keep more of their hard-earned income and decide how to spend, invest or save it.”

As literature begins to pop up….we begin to see the story of the “Tax Cuts and Jobs Act”, and truth in the tax savings. I mentioned ( In my Video ) advantages as a married taxpayer, and I primarily introduced the the taxpayer’s lower tax brackets starting in 2018. Under $18,650. 10% ( First Threshold) ( 2nd Threshold) Income over the first threshold is 15% in addition to the $1,865. tax liability; up to $75,900. taxable Income. (3rd Threshold) builds on the first two and adds 25% to income over $75,900. up to $153,100. (4th Threshold) First Three plus income over $153,100. taxed at 28% up to $233,350. (5th Threshold) 33% up to $416,700. 6th and Final at 39.6% of excess over $470,700. plus $131,628. taxable liability. INCOME TAX ON INCOME OF ESTATES AND TRUSTS Income tax Rates for Estates and Trusts filing and paying tax are as follows, however, WITH ESTATE TAX ITSELF being fazed out. 15% on first $2,500., then 25% on excess but up to $6,000., 28% on the excess over up to $9,150., 33% on the excess over up to $12,500. and 39.6% on excess over $12,500. This is not beneficial to income beneficiaries if income is not immediately distributed to the beneficiaries as income that remains in the trust is taxed at the Trust level at these higher rates. REDUCTION OF CORPORATE TAXES. 15% on first 50K of Income. 25% on excess up to $75K 34% on excess up to 10M 35% on excess above 10M. Pass through entities like S Corps will pay a 20% reduction on taxable liability at the shareholders level ( Individual’s Tax Return). There are many more changes and additions in the Tax Act that I will continue to discuss as we get into 2018 and have time to can squeeze out more goodies during the 2017 tax season.

Hello world!

Hi, We are getting ready for the busy tax season. A lot of changes are happening within the industry. As a taxpayer you are anxious to hear about the changes in tax laws in 2018. Tax literature is being published and ready for shipping. We will be posting comments and recommendations very soon! Looking forward to hearing from you.