US foreclosures - Boholt Seminars - NO

Aaron,
Good point Re Ms Boholt. I think her 'representative' was shortsighted, rude and looking for issues when there were none, but nothing more than that. In fact even Henry Kaye did nothing I thought was really 'out there'. Ok he sold properties for a lot more than they were 'worth' (although he sold them at that price so they were 'worth' that to someone!) but no-one bats an eyelid when car dealers do it... If you have an edge that allows you to sell something to someone for $25-30k more than anyone else would pay, I say well done and go for it! In fact, if you really want to get down to it, anyone who owns a property has paid more than someone else wanted to pay for it, so in effect IMHO the whole 'value' thing is completely up for debate:) - as proved amply by the whole sub prime fiasco...

My Aust finance broker has used my US income to prove serviceability on AU property I have, so it _can_ be done. I have just refi'd with Citi on a couple of little properties I have here and they wanted to see my US returns and rental statements...

I should know more about tax, so I bow and scrape and tug my forelock to most in that area. I do claim US losses against income earned in Aust, but everything is in my name and I pay full US and Aust returns. I have never done anything 'iffy' and just accept it as one of those things. There was a time when I couldn't claim any losses, now I can. Maybe it will change, maybe it wont. Apart from one building I had issues with of my own making the losses are small in any case.
 
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A search on Google for "Quarantine Income" Free Trade Agreement USA Australia turns out little. Can you provide some links?

here's my understanding.

i'm no accountant, but the foreign income tax treaty states that if you are an australian resident for taxation purposes, you will pay the 15% in the USofA and the remainder according to your tax brackets, here. you DO NOT PAY 15% in the US and then your whole bracket tax rate here - the 15% is taken off your Aust rate here.

however, if the LLC / C Corp / S Corp you operate out of is a US based company, the income can stay there, legally, regardless if you as a director or shareholder are a ARFTP (australian resident for taxation purposes).

should you derive a dividend from the trust or company, that dividend will be subject to the tax treaty law stated above.

so you can essentially grow your cash and asset base very quickly in the US by quarantining the income and re-using it within the US - you don't HAVE to bring it back, pay the extra tax difference and then go out to re-invest what's left. and no, for the record, there's no IRS law stating citizens have to pay income tax. HOWEVER HOWEVER HOWEVER if you think for a second that the law doesn't apply to corporations or entities then you are sadly mistaken and will be taken to the cleaners.

the trick is to get the income here -somehow - without breaking any rules. you don't want to get pinged on "intent to evade taxation" by the ATO and the tax information sharing act thingo dates all the way back to 1982 between the UA and AUS. but again, if there's no rule saying you CAN'T, then it's open to interpretation.

maybe Emma171 or lawsys have a system they use - i don't know, this is as far as i have gotten in my research with regards to income quarantining. maybe they just keep the money in the US for when they go back, i don't know, but i'm digressing.
 
My Aust finance broker has used my US income to prove serviceability on AU property I have, so it _can_ be done. I have just refi'd with Citi on a couple of little properties I have here and they wanted to see my US returns and rental statements...

I should know more about tax, so I bow and scrape and tug my forelock to most in that area. I do claim US losses against income earned in Aust, but everything is in my name and I pay full US and Aust returns. I have never done anything 'iffy' and just accept it as one of those things. There was a time when I couldn't claim any losses, now I can. Maybe it will change, maybe it wont. Apart from one building I had issues with of my own making the losses are small in any case.

....which would be why you can use it to prove serviceability.

i'd just say to remember that the returns are awesome, so what if you pay more tax?

cheers.
 
Aaron,
Thank you for that great insight. Ten years ago I read up on this, since then I really couldn't be bothered. I think what you would find most people do is to live sort of 'seperate' lives. You have your foreign stuff and your local stuff. I used US money when I was overseas, and Aust money when here. Whenever I had a 'reasonable' amount of money in an o/s account there was always a tax I forgot about or an insurance policy or a feral tenant that needed dealing with. Also travelling and car hire and basic repairs can be quite big expenses.
 
Aaron,
Thank you for that great insight. Ten years ago I read up on this, since then I really couldn't be bothered. I think what you would find most people do is to live sort of 'seperate' lives. You have your foreign stuff and your local stuff. I used US money when I was overseas, and Aust money when here. Whenever I had a 'reasonable' amount of money in an o/s account there was always a tax I forgot about or an insurance policy or a feral tenant that needed dealing with. Also travelling and car hire and basic repairs can be quite big expenses.

yeah the FTA that lil johnny signed with bushorama changed a lot of things.

and honestly - thank YOU :D
 
however, if the LLC / C Corp / S Corp you operate out of is a US based company, the income can stay there, legally, regardless if you as a director or shareholder are a ARFTP (australian resident for taxation purposes).
I thought an LLC, being analogous to a discretionary trust, had to distribute its profits. Or would you have those profits distributed to some C-Corp (equivalent to Australian company) you've set up which owns the LLC? :confused:
Aaron Sice said:
so you can essentially grow your cash and asset base very quickly in the US by quarantining the income and re-using it within the US - you don't HAVE to bring it back, pay the extra tax difference and then go out to re-invest what's left. .... the trick is to get the income here -somehow - without breaking any rules.
This may be way too simplistic, but could you use a US credit card, ie held by a US bank, to pay for your groceries, petrol, etc in Australia - since credit cards are internationally accepted - and have that credit card paid by your US LLC/C-Corp?

I guess any payments made by the LLC/C-Corp would be viewed as fringe benefits to directors, so that's probably not going to work... it would have to be declared in Australia as a taxable fringe benefit or something, I think.

Like lawsjs, tax isn't my specialty - obviously! :p
 
Due Diligence

I've verified Yolanda Torres is a licensed RE agent. You can look it up here.

Nevada Real Estate License check.


Setting up LLCs

Aaron has explained that an LLC is like a discretionary trust.
There is a question mark over whether it is desirable to purchase in the name of an LLC.

Here is what people have claimed on the internet:

Cons
- Banks are reluctant to lend to LLCs
- LLCs involve additional paperwork

Pros
- LLCs provide a protection against inheritance tax
- LLCs can retain profit overseas, and are not taxed until the income is repatriated. (I don't agree. See operation Wickenby http://law.ato.gov.au/atolaw/view.htm?Docid=TPA/TA20104/NAT/ATO/00001, I also believe there is a control/ownership test. If you own or control more than x% of an overseas entity, then you need to report the income)
- There are no withholding taxes when a property is sold

The following material comes from a content farm. LLC and Income Rental Property

The question arises whether to incorporate in Nevada or another state. I believe there may be a requirement that LLCs trade within the State they incorporate.

If anyone has set up an LLC, please share your experience here.
 
BTW on the tax thing. A very big warning.

I got a standard 'Wickenby' letter. Believe me it wasn't pleasant. I knew I was fine but I can tell you it was more aggressive and rude than what you experience saying something you shouldn't at a Boholt Seminar:) Had I had anything to be scared of I can only imagine how I would have felt.

I mentioned it to my solicitor and he told me the story of two of his clients who were involved by their long standing accountant in 'the' scheme some ten years ago - for one year only. Last year they got a letter (my letter) from the ATO, so they popped in to have a chat with my solicitor on their way to lunch on say a Tuesday. My solicitor spoke to a Tax Barrister that afternoon and on Wednesday they fronted up to the ATO in person to discuss and 'fess up' - All up it involved between two people a tax gain of something like 30k, a pittance for these people. Thursday morning at 6am Fed Police and Tax agents arrived on their doorstep to take all their files, computers - the lot. Thursday afternoon - gaol for both of them. They are still there. It is immediate gaol, the court case is to decide how much you will pay in fines. In this case it was something like $1m EACH - and as I said the tax gain was something like $30k.

Just do NOT cheat. It is NOT worth it.
 
Emma, I can't recall whether you are in LV currently, but if so, would you be prepared to meet an associate of mine who lives there. He has been buying LV property for 25 years, and the two of you might benefit. If he says you are ok, that would go a long way to confirming your bona fides for me.
 
Chui - my lender has said they will only lend to personal name not LLC but okay the title being transferred to LLC upon settlement. I've yet to research the legality/practicality/ease of this. Also not sure if it's worth keeping in personal name to allow refinancing in the future if needbe.

WW - I don't understand who needs to confirm what with who and why. If you've got someone over there who is well experienced, why don't you hit him up for advice? Forgive me if I've misinterpreted.

Perp - It's fairly tough for Australians to get looked at for finance there, let alone get credit cards, no?
 
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dear unknown,
im german,live in melbourne.
i went to the seminar of db as well.i read all the books by rich dad and dolf the roos etc.in theory i have knowledge,but not in real life.
if u or ur sis(which must have felt like a criminal at the seminar to be escorted outside).
i dont know where to start to invest from australia in the usa.
i lived there,been there many times etc but never invested.
how ll i do it?invest through a llc,set bank account up in usa or only have rent transfered to aus,do u know any good management company.what tax implications will i have?
dymphna said a lot,but when i checked with website of irs,it stated different things.
im really confused and agree that anything has a price.
im a personal trainer,and sometimes help people for free(means no money)but they pay me with their appreciation etc.

pls contact me here or email [email protected]

i want to thank you in advance and hope to hear from you soon

bernie
 
see red, coz i'm seeing stars.

I thought an LLC, being analogous to a discretionary trust, had to distribute its profits. Or would you have those profits distributed to some C-Corp (equivalent to Australian company) you've set up which owns the LLC? :confused:

that's a good Q - there's nothing stopping a C Corp being a 'trustee' i guess...but then the C Corp will pay tax on it's earnings from the trust, then distribute to you, being an ARFTP....not much point really.

This may be way too simplistic, but could you use a US credit card, ie held by a US bank, to pay for your groceries, petrol, etc in Australia - since credit cards are internationally accepted - and have that credit card paid by your US LLC/C-Corp?

i guess that could work, but if the ATO start sniffing around and see a CC in surplus by tens of thousands and it being used - i wonder if it's classed as "income" or as "credit"? i know credit isn't taxed. hmmm - that would be an interesting one to test the waters with. again, intent is the issue here.

I guess any payments made by the LLC/C-Corp would be viewed as fringe benefits to directors, so that's probably not going to work... it would have to be declared in Australia as a taxable fringe benefit or something, I think.

not if paid as a dividends - it's just that, an unfranked dividend. a trust just decides who gets the money before the trust is taxed and the tax is deferred to the trustee on the amount they recieved.

a fringe benefit is an employment benefit not normally associated with pay - ie a car. at least that's my basic understanding of it.


Like lawsjs, tax isn't my specialty - obviously! :p

*edit* that Wickenby case clearly outlines them using credit cards to utilise the offshore funds in a lower tax haven. however, the money was earned HERE then sent offshore as "costs" for the deductions here in the higher tax bracket, and returned via "loans" and "credit" for use here, from the lower tax bracket.

also

the amounts received under the alleged 'loans' may constitute dividends for the purposes of section 44 of the ITAA 1936;

it appears that the dominant purpose of entering into the arrangement is to obtain one or more tax benefits

Australian residents are required to declare world wide income derived directly or indirectly from all sources in or out of Australia.

the setup being discussed is income derived offshore, tax paid offshore and utilising an established credit system to use the surplus income here. it's all through US entities. interesting - almost like bunging $10k onto your CC here and then having a holiday in London with solely your CC - i see that being not much different, other than the intent. one is a holiday, one is income. but money is money.

leaving the money in the US sesm to be the only option. the second you move it out of the US you are up for the extra tax if you are an ARFTP. move to singapore, maybe?

may be some serious precedent, it's interesting to know, but i wouldn't want to be on the end of the ATO's stick when they came a-knocking. it's fun to talk about (for a geek like me) but i think i'll just pay the extra tax - cheers.
 
I've got a stack of handwritten notes from DBs seminar last Sat.. (27 pages to be precise :confused:).

She to her credit covered most combinations of LLCs, C Corps, S Corps linked to trusts back here, pros & cons. Was talking about one LLC per American property but as this gets expensive perhaps 2 per LLC. She also spoke about holding funds in the USA so I'm assuming that must be legal. Have to give her credit for asset protection, etc. Even if you end up with some many corps and trusts it looks like a mud map on the wall.

Had planned to go through these notes, type them up, get them into shape. But just not enough time this week.
 
further to the tax discussion, does the ability to delay paying capital gains with an LLC entity in the US still exist providing you reinvest in a similiar asset class? I remember Kiyosaki mentioning this in his books.
 
She also spoke about holding funds in the USA so I'm assuming that must be legal.

that'd be for quarantining to avoid the double taxation, so yes, i imagine it would be perfectly legal.

she would then probably distribute the funds back to her aussie trust, which then allows infinite number of trustees to whittle the tax payable down to whatever she deems acceptable.

that's a good way to minimise tax - with 3 or 4 trustees per trust, that could see you paying no more than 25% tax all up.
 
Funny you say that. One of the things I baited Emma with to get her to go to the DB seminar was in fact tax setups. Emma said it was a waste as you just can't get any finance, but the next thing I heard (through mum) was she had actually gone and been thrown out. At least she listened a bit to me for once... You can never know too much - especially ignorant me!

In hindsight it wouldn't surprise me DB was very expansive on that because she clearly knows that backwards and sideways - but a little more 'hazy' on the actual property... Just a thought.

I am getting a lot out of this tax discussion. Whether it falls in a heap regarding the finance is another matter... Asset and tax protection is one thing, but I would rather have an asset and pay lots of tax than not have the asset in the first place:(

Bernie, Emma spent a few months as an exchange student in Germany and we have both spent time in Austria skiing, so I am sure Emma will contact you. And one of the greatest pleasures of my life is getting a go-fast car and actually driving there (Berlin Frankfurt in 3:30 the day Michael Jackson died:) - unlike the idiot automotive persecution we suffer from in Australia:( And one of my favourite Grand Designs episodes is the one on the Huf Haus...
 
While we are on the subject of tax, there are plenty of promoters who spruik stuff that may be legal, but still fall within the Part IVA of the Taxation Act. This is an interesting law because it is designed to cope with all the permutations that a tax adviser might wrangle to reduce a tax bill within the letter of the law. Which in effect means that you can break a law by not breaking laws. Suffice to say, it is safer to just sucker up and pay tax than try any fancy measures. If not because of inheritance tax and fear of legal actions from US, I'd have just invested in my own name.
 
yeah but using discretionary trusts is a proven and effective and allowable method of reducing tax payable on a larger dollar amount - has been since the middle ages.

my point was the intent to avoid paying tax - which would fall right under the jurisdiction of Part IV(a).
 
Which is what my solicitor said. If it 'smells' in any way or appears sneaky just don't do it. That is a very far reaching word - 'intent' and even if you aren't fighting the case from gaol it would be expensive fighting the ATO.

I had not even considered inheritance tax BTW Chui. That has got my attention. In ten years I have never had a legal issue with a US tenant. Not to say it won't happen, but it hasn't yet.
 
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