Reporting Offshore & Overseas Real Estate to IRS

Technically, foreign real estate is not reportable to the IRS on Form 8938.  However, while foreign real estate is not reportable, you still may be liable for reporting based on the structure of your real estate holdings.  A large number of people’s offshore real estate property is held in an offshore trust or foreign corporation.  If you hold real estate under these types of entities, it’s likely that your shares in these entities are required to be reported on Form 8938 and perhaps other forms.

Foreign Real Estate Reporting Requirements

Form 8938, the Statement of Foreign Financial Assets, was created in 2011.  This form must be filed by anyone with significant assets outside of the USA.  Among other items, you must report ownership of your shares of foreign corporations, trusts, LLC’s, etc.  Often times, these entities include offshore real estate holdings.  As an example, a residence or rental property, if held in a corporation, partnership or trust – will be subject to inclusion on Form 8938.

Additionally, if you open a foreign bank account to facilitate the purchase of a residence or rental property (even if it’s in your personal name), and that account has more than $10,000 in it on any one day of the year, then you must report this on a Foreign Bank Account Report.

Do I Have to Report Real Estate Holdings Abroad?

Whether or not you are liable for reporting offshore real estate holdings to the IRS is a tricky matter. The tax attorneys at Freeman Tax Law have extensive experience in dealing with the IRS in regards to offshore matters, we can even help you obtain a 1031 exchange, which can be very beneficial as 1031 еxсhаngе оf foreign rеаl estate аllоwѕ уоu tо еxсhаngе one foreign property for аnоthеr with thе ѕаmе tаx bеnеfіtѕ.  If you would like to schedule a free, confidential phone consultation to discuss your personal situation, please give us a call, or contact us via email – we would be happy to help.