January 1st, 2016, recognized foreign retirement plans will be bracketed with US retirement plans for the purpose of investments; which means our recommended Hong Kong ORS402(b) is for anyone, including US people to invest in US Real Estate completely free of tax, as an Exemption from Foreign Financial Institution Regulatory Reporting (FIRPA).
[box type=”tick” style=”rounded” border=”full”]Use of our recommended Hong Kong ORS402b means that you will be tax free on your property developments in the USA.[/box]
Additional interesting FIRPA points:
1) Sub Part F financing income, jargon for a tax avoidance rule, where you have passive income; if you are not careful instead of it taxed at a default rate of 10-% it is taxed at a higher tax rate.
This January 1, 2016 law abolishes that rule which means that not only conceptually is this program clear of taxation, when following our recommendations, but it also means you do not have Sub Part F problems.
[box type=”info” style=”rounded” border=”full”]This law is stuck in the middle of a 233 page amendment bill![/box]
2) Unrelated Business Income Tax (UBIT)
The legal point it is not possible to use a foreign retirement plan from most other countries because quite apart from the tax issues is the legal point of whether these foreign retirement plans can actually comply with local rules. In many countries they can’t.
Similarly to U.S. Retirement Plans find it difficult to invest outside of the U.S. due to UBIT that is also the type of thing in other countries that causes difficulty.
If you have people in Europe or a syndicate of Americans therefore the solution is found legally in Hong Kong because it is a valid transaction. When it is structured properly we know exactly now our tax position under FATCA but also under the Foreign Investment in Real Property Act (FIRPA).
[box type=”note” style=”rounded” border=”full”]We can construct your ORS 402(b) as a Real Estate Investment Trust, effectively, and there is a further tax exemption for anything up to 10% of US Real Estate Trusts themselves.[/box]
These legal points are absolutely huge! We can do what other jurisdictions can’t do and we know exactly our tax position.
The attached is a cut & paste from the following Zero Hedge article:
Bloomberg: U.S. Eases 35-Year-Old Real Estate Tax on Foreign Investors by Hui-Yong Yu – Dec. 18
The new law also allows foreign pensions to buy as much as 10 percent of a U.S. publicly traded real estate investment trust without triggering FIRPTA liability, up from 5 percent previously.
[box type=”alert” size=”large” style=”rounded” border=”full”]Section 323 of the Bill exempts the ORS402(b)[/box]
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