We often discuss buying low and offering high, but many specific investors often do the contrary. Particularly in retail accounts and 401(k) plans, investors are often “late to the party,” waiting before market hits a higher to reenter. This behavioral bias results in momentum that may drive the market higher, but how is the main element question long. Further, investors would be better suited going for a more disciplined periodic investment approach. With the market hitting a high, this concern is at play presently.

The taxes rate in Colombia is greater than in america, so no tax will be due to Uncle Sam on the gain from that property. 50,000 when you sell the property in Colombia in 2016 (very good for you by the way). When you sold the house in Panama, you paid 10% to Panama and transferred the gain to the house in Colombia for US taxes purposes. 50,000 to Colombia, leaving nothing for the united states on this portion of the deal.

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100,000 from the Panama property. All this planning and structuring allowed you to defer a 10% US capital gain for 5 years. 250,000 main residence exclusion. To qualify for both, you must contain the property for further than five years and live in it for at least two of these five years.

Then, you can use the exclusion to lessen or eliminate the capital gains, including taxes carry-over from a like-kind exchange. Rental income and expenditure from just offshore real estate is reported on your individual return, Schedule E, as a US rental property would be just. You must keep US quality records and books, including all expenses from management, improvements, repairs, and taxes paid. You must follow all US taxes guidelines for these deductions and expenses, such as depreciating improvements and deducting fixes.

The IRS has the right to audit you just offshore real estate, so prepare yourself. It could be common to pay your expenses in profit Colombia, but you will have trouble deducting any expenses with out a receipt and proof payment (such as a cancelled check). A location of emphasis in an audit of offshore real property is travel and other expenses associated with going to the property.

If you are soaring to Panama five times a yr, a week going out for, and then expensing these excursions against your one local rental unit on Schedule E, the deduction shall not endure an audit. In fact, chances are to be the reason for an IRS investigation. A yr for a couple of days I generally advise clients that they may visit their local rental properties once. If they abroad haven’t any other business, and aren’t using the getaway as a holiday, the whole trip may be deductible.