Purchasing foreign property often comes with being closer to family, rewarding cultural experiences, international adventure, and the realization of long-held dreams. It could also mean having a home away from home in a relaxing place or near loved ones who live overseas. However, although owning foreign property can enrich your life, it can also cause complications when it comes to taxes, estate planning, and inheritance. It is vital that you understand the implications of buying property abroad and work with an experienced attorney to avoid issues like double taxation and mandatory inheritance laws.
Unfortunately, there are very limited international estate tax laws – and estate tax and gift tax laws can vary drastically from country to country. This lack of consistency can lead to double taxation and large amounts of confusion, especially if it is unclear which country the owner lives in permanently. To fight some of these ambiguities and complexities, the United States has established treaties with 18 different countries. These treaties establish specific rules related to estate taxes, gift taxes, and the determining where a resident is domiciled. In many cases, the treaties provide a tax credit in the country of residence so that the estate’s owner does not have to pay estate taxes twice.
According to the Internal Revenue Service, the United States has estate tax and gift tax treaties with the following countries:
- South Africa
- United Kingdom
The details of each of these treaties may be different. It is critical to speak with an experienced international estate planning lawyer about your case if you have foreign property in one of these countries.
Whether you have property in a foreign country or whether you are considering a purchase overseas, you may wish to fully understand the tax implications of such a decision. Our California estate tax law office works with a number of clients who are non-residents or who hold international property – and we can help you with a large number of legal issues related to international estate planning. To learn more about our services or to request an initial consultation, call The Law Office of Janet Brewer today: (650) 325-8276.