All Forum Posts by: Jennifer Hashisaki

Now is perhaps a better time than ever to invest in U.S. real estate for both income and long-term appreciation. However, as can be expected, the U.S. seeks to tax the appreciation on these properties when they are sold and tax their value when transferred by gift or upon death. This tax burden falls heavier on foreigners, because foreigners don't enjoy certain credits and deductions reserved to U.S. persons. By planning ahead, foreign real estate investors can still minimize or eliminate some U.S. tax consequences of their investment by using offshore corporations. For those currently owning U.S. real estate in their individual names, today's depressed property values also provide a rare window for transferring their properties to a tax-efficient, foreign corporation structure at minimal cost. In any case, and for many legal reasons in addition to saving on taxes, proper planning must be completed before you sign the real estate contract.

Even if a foreigner does not file U.S. tax returns or have any business in the U.S., the mere fact of owning U.S. real estate results in a U.S. estate tax return filing requirement upon the foreigner's death. The estate of a U.S. citizen, resident or person domiciled in the U.S. ("U.S. person") includes all assets the decedent owned anywhere in the world. On the contrary, a foreigner's taxable U.S. estate only includes U.S. situs assets.[1] The definition of U.S. situs assets includes real property, but excludes some intangible property such as stock in foreign corporations.

The estate tax is currently levied on the estates of natural persons at a maximum 45% rate, increasing to 55% in 2011. U.S. persons currently enjoy a credit that shelters the first $3,500,000 of assets from taxation, as opposed to foreigners who have only a $60,000 credit. In other words, when a foreigner dies owning U.S. real estate, an estate tax is levied on the value of that property in excess of $60,000 and could result in a lien on the property if not paid. Moreover, unlike with the estates of U.S. persons, real estate passing through a foreigner's estate is generally taxed at its full market value without any reduction for mortgages and regardless of how much they paid for it. An unlimited marital deduction that essentially exempts transfers between spouses is also not available when the surviving spouse is a foreigner, unless an effective Qualified Domestic Trust ("QDOT") is created.[2]

How then can the U.S. estate tax be eliminated for foreigners holding U.S. real property? Simply put, the U.S. estate tax does not reach stock held by a foreigner in a foreign corporation that in turn owns U.S. real estate. In order to effectively transfer indirect ownership of the property upon death, the foreigner simply uses a will or trust to govern disposition of stock in the foreign corporation. Since the foreign corporation stock is not a U.S. situs asset, it is not included in the foreigner's U.S. taxable estate.

Of course, in order for such a structure to withstand IRS scrutiny, it must be properly planned, documented and maintained. Not only that, an offshore corporate structure can carry with it income tax consequences that should be weighed considering the type of property, investment horizon, intended use, etc. That being said, this offshore holding company structure has several non-tax benefits such as keeping the property outside of a U.S. probate court, as well as providing a certain degree of anonymity as to who is the ultimate beneficial owner of the property. Moreover, the foreigner can be insulated from liability from accidents that might occur on the property if properly structured and operated.

When renting any property you own, it is imperative that you locate reliable and trustworthy tenants to ensure your home is cared for and the bills are paid on time.

Advertising for and interviewing tenants is much like an employer attempting to locate the next great worker to join the company. Here are a few helpful tips to keep in mind next time you are searching for a new tenant.

First off, some landlords have found it helpful to charge a small yet reasonable application fee. The application fee is not necessarily meant to distinguish those who can and cannot truly afford the costs involved in renting your condo, but it will quickly weed out those who are serious and those who are just wasting your time. Some condo owners have also chosen to solicit the possibility of crediting the cost of the application fee to a month's rental charge so that the actual tenant you choose will not incur any additional charges.

Secondly, you can have applicants give you permission to run a credit check before giving them permission to rent your condo. Many view a person's credit report as a quick glimpse into their character and trustworthiness. While investigating the person's background history, it may also be a good idea for you to contact their current and previous landlords to gather their opinion as to whether the tenant paid the rent on time, kept the property in good condition, and left on good terms.

Another option to keep in mind which is more of a no-brainer is to verify the person’s employment. This is, after all, how they will be able to pay the rent. You can ask to see paycheck stubs representing the last month of employment. You can add the wages earned and make an educated guess as to whether or not you feel this person would be able to comfortably afford the costs involved in renting your property. In addition, you can call the employer and verify that they are still actively employed.

Lastly, more than likely every property owner will have some sort of rules in mind that they want their tenants to follow. For example, you may not allow pets or smoking in the condo. You may have a rule that persons not included on the lease must not stay at the property more than a certain number of consecutive days. Whatever your rules might be, always be sure to include them in the lease and enforce them when necessary. If you let your tenant get away with one rule, they will more than likely attempt to get away with another, and then it all goes downhill from there.

By taking simple precautions before selecting your next tenant, you can drastically improve your chances of choosing a tenant who will care for your property as much as you do, and save you the time and stress of having to deal with one problem after another. Renting your condo may be a great way for you to earn some extra money in this economy, but it's a big decision that should not be taken lightly and should not be executed without first doing your homework.

Whether for sale, rent, or just to liven up the place, here are a few recession proof remodeling ideas for your home.

Be it in preparation for renting or selling your property, or simply for the ability to once again appreciate your home, minor renovations can go a long way. Presenting a home which does not further extend a potential buyer's investment is key. Particularly in this selling environment, where foreclosures are common, and the question on most purchasers’ lips is "What does it need?" If your home needs remarkably little, compared to others, in terms of both time and money invested, you are presenting a better deal without having to lower your price.

Two very basic upgrades most anyone can do on a budget are a fresh coat of paint and the addition of house plants. While a fresh coat of paint seems like a no-brainer, it is most often overlooked. This quick-fix will make the interior architecture of your home sharper, cleaner and more defined. Light will reflect better off fresh paint and make your rooms brighter (provided you use light or neutral colors). Meanwhile, natural plants, like potted palms or ferns, will add vibrancy of color and cleaner, fresher air to your rooms.

As most people enjoy walking around their homes barefoot, floors are vital to making a home feel cozy and comfortable. Keep this in mind, and perhaps try taking your shoes off and seeing how your floors feel. It may be time to refinish that wood floor or regrout your tile. Furthermore, area rugs and runners make a great addition to rooms and hallways. They contribute to the overall decor, are easy to clean, and can be a very frugal way to change the look of your home.

Fixtures for both lighting and plumbing are an amazing way to update the look of certain rooms. Swapping out dome lights for lighted ceiling fans or adding accent lighting is a great place to start. Even in rooms that have a nice central fixture, accent and indirect lighting can completely change how a rooms lighting feels. In the bathroom or kitchen, new faucets can add that clean modern, or embellished classic look you desire. New shower heads can eliminate the damage hard water has done, improving your shower functionally as well as aesthetically.

Lastly, take a look at your wall adornments. These include art, pictures, shelving and window coverings. These little touches can make a big difference in how your home is perceived, both by you and any potential renter/purchaser. A selection of pictures and knick-knacks can make a property feel like a home. Too much can make it look like an antique store. As well, window coverings should fit the overall decor, be clean and in good condition. Don't think this is important? Ask anyone who has purchased a new construction home and had to wait for their window coverings to be installed.

While these alterations will cost a little bit of money, the return on investment can be huge if it means making the deal, or simply the satisfaction of owning a beautiful home. As well, your home may not need everything mentioned here. If it does, these upgrades can be done in whatever order, and on any time table your budget and free time allows. However, starting now will allow you time to absorb the costs and not leave you in a procrastinators panic if you decide to sell down the road.

Once you've found a property you want, the art of making it happen begins. Here are a few tips to help you at the negotiating table.

One of biggest myths in real estate is that all sellers are so desperate to sell their homes that they will negotiate any offer no matter how low. That may be true for some sellers but not in all cases. In Fact a low offer can even be seen as an insult in some cases. The art of negotiating a real estate deal in today’s market requires both skill and technique. To help you prepare for your next deal, here are five ways to negotiate a good real estate deal:

1. Do your research. Remember, information is power. Be Sure to collect as much home-specific, and local market information as possible when considering any property. For instance, you should know what other homes are for sale within a particular neighborhood and the amount of time those home have been on the market. Don’t forget to ask the seller why they’re selling the home and how soon they expect to move. You should also ask the initial purchase price paid by the seller and consider any upgrades which may have added value.

2. Keep a calm and clear head. In other words, never let the seller see you sweat. You may be extremely anxious to move into the seller’s home for variety of reasons. You may have had a difficult time finding a home close to your job. If you have children, you may have concerns about schools and enrollment schedules. Whatever the situation may be, make sure you remain calm and stay focused. Countless bad business decisions have been made when a buyer is not thinking clearly.

3. Keep your attitude in check. Often times, buyers will actually insult the seller by letting them know that their home is not worth the amount of money they are asking. While this is sometimes seen as a way to whittle down the price, it can actually cost you the deal if not handled properly. If there are obvious flaws with the home, discuss this matter politely with the seller, or through your real estate agent, and see if they’re willing to either repair the flaw or reduce the price. Remember, kindness goes a long way in real estate.

4. Establish rapport. This is a vital step in the art of negotiating. From the beginning, establish a good business relationship with both the agent and the seller. Have your finances in order so that you can move quickly if the deal calls for it. The whole idea is to show them that you’re qualified to purchase the home. This lets the seller know you are serious and financially prepared to make the deal happen.

5. Compromise. Remember, it’s rare for both parties (seller and buyer) to get exactly what he or she desires when it comes to buying or selling a home. Your ultimate goal should be to acquire the property at an agreeable price and under agreeable conditions. Thus both parties may have to make concessions to reach that agreement.

Remember, not every deal is going to be a good deal. The key to making a good deal is being aware and dynamic. This means being prepared to act if an agreement can be reached, or willing to walk away if need be. Do not let your emotions get the better of you, and do not settle for less than you are really willing to. Buying a home is like anything else. If you know what you want, and are willing to wait and work for it, you will find what you are looking for.

With more and more people looking for every opportunity to make money, some condo owners are discovering new and creative ways to earn extra cash. Condo.com outlines five of the most popular methods used:

1. Rent out your condo

Probably the most obvious method for those whose condo is their second home would be to rent your condo to someone else. This can be done on a month-to-month basis or on a more long term timeframe such as a six month or twelve month lease.

2. Weekday renting

If you don't feel comfortable completely giving up occupancy of your condo, you may be able to find someone willing to rent it from you on a "weekday only" basis. This is a particularly popular medium for businessmen and women who work away from home regularly. There are some certain advantages to renting your condo this way. For one, you would have access to the condo on the weekends, which works out well for those who only use their condo as a second home to visit on weekends and special occasions. In addition, the type of people that would rent your condo for business purposes are much less likely to damage the residence or throw late night parties.

3. Sell unused space

Many condos come with a garage, but some owners find that they have little or no need for such space. You can take this opportunity to lease out this space to someone looking for some storage room. You can start with friends and family and work from there. Perhaps someone you work with may be interested. It will be much easier for you to find a taker if the person already knows and trusts you, since you will have possession of their property in your home.

4. Rent an unused parking space

If your condo association provides you with a certain amount of parking spaces per unit, a great way to make some extra cash is to lease out any spaces you do not regularly use. Perhaps you don't own a car, or if you're single you may only use one of multiple spots. Families with more than one driver or tenants who have regular visitors may jump at the opportunity to have an extra parking spot at their disposal when needed. You can make an agreement which would provide them with one of your parking spaces in return for a set amount of money monthly.

5. Rent "office space"

Many condo owners in downtown or metropolitan areas have had success in allowing an individual access to an unused room during the day as a private workspace. If you have Internet, cable TV, telephone or a fax available in your condo, you can setup a desk and hookups for these services in a spare bedroom which would allow a daytime worker a peaceful and private work area which would not require them to travel long distances between other locations he or she may need to go to throughout the day.

If you're looking for any sort of extra money to supplement your income, creativity is the key. Some condo owners feel that since they do not own a traditional suburban-type house, they are not able to do anything with their home other than renting it out to another tenant. If you take a little time to evaluate which amenities or areas of your condo you are not using, you may be able to find a number of ways you can make money from your condo.