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Ireland to US tax question

Old 07-12-2012, 06:21 PM
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Default Ireland to US tax question

So my brother in law has a home in Ireland that has been a rental property for a little while and they would like to realize the money but they don't want to get hit so hard with taxes. It is not like he is well off but his late mother left it to him and he and my sister would like to use that money for bills and everyday expenses. His big hold up is how hard he gets hit with taxes so that money has not been able to be utilized. What would be the best way to get the money over here in the states with the least amount of penalty? Seems like every thing we can think of incurs large penalties.
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Old 07-12-2012, 08:08 PM
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It's been awhile (8yrs), so tax info may be way off. I designed and finance the build of a house in Ireland for my daughter and son-in-law. He was/is an Irish citizen. The idea was to build it and rent it for a few years, then move "home" from Coral Cables.

Their plans changed and they sold the house. They didn't have a way to move the money after the sale. I had my broker at Morgan Stanley handle it, it was seamless. One thing I found out about bringing money into the states was, homeland security gets involved. Because Morgan Stanley had offices over there and I'm a US citizen, they could move the money within the company without raising any red flags.

For me, I was just getting repaid a loan so I had no tax exposure. I don't know what they did/reported.
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Old 07-12-2012, 09:48 PM
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Thanks for the info. It isn't like they don't want to pay taxes, they just don't want to get hit with more than they have to.
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Old 07-13-2012, 04:06 AM
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The laws have changed dramatically over the years when it comes to foreign assets. Has your brother in law talked to a CPA who knows these rules well? If it were in the US, there would be little or or no gain because the value of the property would be "stepped up" to the value on the date his mother passed away.

Be sure the professionals he speaks to are well-versed in dealing with cross-border issues. I know several people who are, but none in your area.
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Old 07-13-2012, 04:15 AM
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Nevermind....See a CPA. I reread your post and it sounds like he hasn't been claiming the rental income. It also sounds like he hasn't claimed any interest on money in Ireland, if any. The biggest issue that may be there is the FBAR reporting. Have fun with that. It looks like they have extended the Offshore Voluntary Disclosure Initiative (OVDI).

If this is the situation he finds himself in, he needs a CPA and maybe a lawyer. Had a few clients go through the OVDI last year. Not fun for them and very expensive in both fines and taxes (and billable hours). There are a lot of variables with this and many positives and negatives with whatever route he takes.

Last edited by Trollin4Tuna; 07-13-2012 at 04:29 AM.
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Old 07-13-2012, 05:40 AM
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I should also note he does have dual citizenship as he was born in Ireland and he has not removed any money at all so far. My thought was to talk to a cpa, and go from there. Just didnt know if there was anthing in paticular he could do.
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Old 07-13-2012, 06:13 AM
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Originally Posted by ytmorris View Post
I should also note he does have dual citizenship as he was born in Ireland and he has not removed any money at all so far. My thought was to talk to a cpa, and go from there. Just didnt know if there was anthing in paticular he could do.
Generally, if he lives in the US, the IRS wants a piece of that income. It doesn't matter if he brings it over here or not. He could have someone collecting the rent in Ireland and then throw it in a fire to guarantee that it never makes it here and it wouldn't matter a bit.

Rental property is rental property. It doesn't matter if it is in Ireland or Florida. Depreciation is different. 40 years IIRC. There are some credits and other things that change because he is abroad but not much. If he hasn't been claiming it on his Sch E, he may have some issues. (If he holds it in an LLC, trust, Corp, etc this can all change)

With that being said, there are so many things that could change, no one could offer any real help without knowing everything intimate detail. I could easily see a situation where he could get a nice refund or owe $100k+ in back taxes, penalties and interest. There are just so many variables to this. That's why I'll throw this in there because I am not giving any advice, just speaking in the broadest terms possible:


"As required by U.S. Treasury Regulations governing tax practice, you are
hereby advised that any written tax advice contained herein was not written
or intended to be used (and cannot be used) by any taxpayer for the purpose
of avoiding penalties that may be imposed under the Internal Revenue Code."
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Old 07-13-2012, 06:53 AM
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OK, thanks for the help. I will pass along he needs to find a professional. I was thinking he could just open a debit card on the account in Ireland and use that card just to pay bills but apparently he would still get hit pretty good.
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Old 07-13-2012, 06:54 AM
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cash - less than $10,000 per person per trip.
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Old 07-13-2012, 07:38 AM
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Just make sure the professionals he consults have real world experience in this area. As a fellow CPA who has limited knowledge in FBAR issues, I can tell from Trollin4Tuna's post that he has been exposed to it.
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