Mark Chaves Jenny Huertas Don Gonzalez, Esq.

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1 Mark Chaves Jenny Huertas Don Gonzalez, Esq.

2 Jenny Huertas, CIPS, TRC, is a licensed Realtor and Director of International Sales with Condo Vultures Realty LLC. In her desire to She earned her CIPS (Certified International Property Specialist and TRC (Transnational Realtor Certified) designations Originally from Colombia, Jenny moved to Miami in 1992 and began her career in the Real Estate industry as a Licensed Mortgage Broker specializing in Foreign National loans. As a Realtor, fluent in English and Spanish, she is active in promoting South Florida s lifestyle to the international market and has successfully negotiated and closed numerous real estate transactions. Jenny Huertas Relying on the proprietary data offered exclusively to Condo Vultures s clients, she provides buyers the insight to take advantage in the dynamic South Florida Real Estate Market. Jenny also works with bulk transactions and works closely with developers, bankers and buyers in the potential acquisition of bulk deals in the Miami area. Jenny was recently interviewed in NAR s International magazine is a graduate of Autonoma University in Barranquilla where she obtained her Bachelor Degree in Business Administration.

3 Mark Chaves, Senior Partner, DazskalBoltonLLP, Tax Services Department, has over 16 years of experience in public accounting assisting clients with domestic and international tax planning and structuring, mergers and acquisitions and business reorganizations. His focus is working with multinational corporations to manage cross border direct and indirect tax issues, foreign tax credit and repatriation planning, reorganization of expatriate and inpatriate tax issues, SFAS 109 and FIN reporting. As well as assisting individuals with international estate planning, inbound tax structuring of investments in US real property, pre-immigration planning as well as Us individuals with cross border tax issues and filings for FBAR compliance. Mark received his Bachelor of Science Degree in Accounting from Queens College and a Master of Science in Taxation from FIU. He is a member of the American Institute of Certified Public Accountants and the Florida Institute of Certified Public Accountants.

4 Colombian Investment in US Real Estate Presented By: Mark A. Chaves, CPA

5 Capital Gain vs. Ordinary Income Foreign individual investors in US real estate should be very conscious of the differences in tax rates between ordinary income and long term capital gain Individual ordinary income is taxed at graduated tax rates which rangefrom10percentto35percentundercurrentlaw Longtermcapitalgain,however,iscappedatamaximumtaxrate of 15 percent for individuals. This rate is scheduled to increase after December 2012 Asaresult,owningUSrealestateinastructurethatcanpreserve taxation at favorable long term capital gains rates applicable to individuals is ideal

6 Estate Tax Issues Foreign investors in US real estate need to be aware of US estate tax exposure when investing in US real estate The US estate tax is currently capped at 35 percent until December 21, 2012 US estate tax was recently modified and currently stands at a maximum rate of 35 percent for taxable estates over $500,000 Undercurrentlaw,anexclusionof$5Mexists. Asaresult,estate would be imposed on US citizens that die while owning property valued over $5M This$5Mexemptiondoesnotexistforforeigninvestors

7 Estate Tax Issues, Continued Neither current law, nor proposed law changes, provide any estate tax relief for foreign individuals who die while holding US assets Foreign individuals are subject to US estate tax if they die while owning US situs assets AUSsitusassetisanyassetphysicallylocatedintheUS. USsitus assetsincludeusrealestateaswellassharesofauscorporation Shares of a foreign corporation are not considered US situs assets Many foreign investors use foreign corporations to invest in US realestateinordertoavoidusestatetaxexposure

8 Tax Consequences of Different Ownership Structures Foreign Individual US Real Estate

9 Tax Consequences of Different Ownership Structures Holding Through Foreign Individual Names Long term capital gains taxed at individual capital gains rates (15 percent currently, scheduled to increase after 2012) No estate tax protection There is a 10 percent withholding on disposition of the property unless certain exceptions apply The 10 percent withholding applies under the Foreign Investment in US Real Property Tax Act(FIRPTA) Foreign investors may wish to consider adding family members to the investment to reduce estate tax exposure

10 Tax Consequences of Different Ownership Structures Assume an investment of $300,000. If two people own the investment, estate tax on $100,000 would be at risk If other members of the family participate in the investment, say 5 total, the estate tax liability of each member can be reduced to $60k, which is the amount of the estate tax exemption

11 Tax Consequences of Different Ownership Structures Holding Through Foreign Corporation with Double Member US LLC Foreign Individual Foreign Corporation 1% 99% US Limited Liability Company US Real Estate

12 Tax Consequences of Different Ownership Structures Holding Through a Foreign Corporation/Double Member LLC Use of a double member LLC eliminates the application of FIRPTA withholding Double or multi member LLC s are treated as pass-through entities under US tax law, meaning that gains or losses of the LLC pass through to the owners As a result, if the majority of the LLC is owned by a foreign corporation, thatportionofthellc sgainwillbetaxedatcorporaterates Profit on rental activity can be reduced using the portfolio interest exemption rules For multiple properties the investor should use different LLCs that way eachllccanbeliquidatedwhenanassetissold

13 Portfolio Interest Portfolio interest paid to foreign investors is not subject to US withholding tax Portfolio interest is defined as interest paid exclusively to foreign persons who do not have more than 10 percent participation in the investment and are not related to the investors Assume rental income of $50,000 per year. Assume expenses of $20,000 per year. The investor can loan the US company money and have the US company pay interest. Assuming interest of $30,000, the profits from the activity will be eliminated. If the interest does not qualify as portfolio interest, there would be withholding tax of $9,000

14 For over 15 years, Don Gonzalez PA has been serving the legal, business, family, real property and immigration needs of Floridians and would be Floridians (foreign nationals). He has serviced every type of immigration visa petition, business purchase, commercial investment and home sales transactions. For individuals, he provides guidance and advocacy in obtaining real estate, business or franchise opportunities (A&I Realty) temporary work visas, visa extensions, and permanent resident ("green card") status for foreign nationals; and we assist clients in becoming naturalized United States citizens, and solving problems with the USCIS and the Department of State, including consulate petitions.

15 Immigration Foreign Investor Strategies for Colombian Investors

16 EDUCATION: B.S. Business Administration Juris Doctorate (J.D.);Masters of Tax Law (L.L.M.) MEMBERSHIPS: Florida Bar, U.S. Tax Court, Broward County, Hispanic Bar Association, American Association of Immigration Lawyers DESIGNATIONS: Adjunct Professor in Estates & Probate at Broward Community College. State Certified Real Estate Instructor. LANGUAGES: Spanish or English PRACTICE: Immigration & Naturalization ; Tax & Estate Planning Foreign Investment Business Law!SU ABOGADO COLOMBIANO DE CONFIANZA! DISCLAIMER: This program is presented for educational purposes only. It does not constitute legal advice. Always consult an attorney for legal advice.

17 Objectives 1. Develop new sales venues in foreign markets and domestic investor markets. 2. Provide an understanding of the Legal areas of expertise required for best practices by realtors 3. Learn immigration laws to increase your real property sales foreign investors.

18 IMMIGRATION TAXES

19 Business Immigration Visa Categories B2 EB-5 E-2 L-1A Visitor Visa Investor Immigrant Visa Treaty Investor Visa Intra-Company Transfer

20 Business Visitor Visa: B2 Duration 6 Months Extend Stay-Change Status Visa Waiver (90 Days)- No Status Changes

21 EB-5 The Investor Immigrant Visa

22 EB-5 Basics $1,000,000 Investor Immigrant TWO YEAR PROCESS CONDITIONAL RESIDENCY 10 US EMPLOYEES DIRECT EMPLOYMENT QUOTA $500,000 Regional Center Pilot Programs (TARGETED ENTERPRISE ZONES) TWO YEAR PROCESS CONDITIONAL RESIDENCY DIRECT OR INDIRECT EMPLOYMENT 3,000 MINIMUM QUOTA

23 5 th th Employment Based EB-5 Investor Immigrant Visa Quota Annual Allotment: 10,000 3,000 Minimum to Regional Center Pilot Waiting period: NONE-Current Law Expires Sept 30, 2012

24 Basic Requirements: Investment funds are from a lawful source Investment will make a positive impact Investment has or will create jobs Investment funds must be at risk The investment amount is $1 million or $500,000 in the case of a high unemployment area or rural area. There are no other requirements such as age, nationality, work experience, or entrepreneur achievements.

25 E-2 The Treaty Investor Visa

26 Treaty Investor: E2 The EB-5 Alternative Company is Treaty Investor owned: Majority Control of company (over 50%) Citizen of Treaty Country

27 Treaty Investor: Countries Citizens of certain countries can enter the U.S.A. with the intentions of investing funds into a new or existing business enterprise. Albania E-2 Argentina E-1, E-2 Armenia E-2 Australia E-1, E-2, E-3 Austria E-1, E-2 Azerbaijan E-2 Bahrain E-2 Bangladesh E-2 Belgium E-1, E-2 Bolivia E-1, E-2 Bosnia & Herzegovina E-1, E-2 Brunei E-1 Bulgaria E-2 Cameroon E-2 Canada E-1, E-2 Chile E-1, E2, H1-B China (Taiwan) E-1, E-2 Colombia E-1, E-2 Congo (Brazzaville) E-2 Congo (Kinshasa) E-2 Costa Rica E-1, E-2 Croatia 11 E-1, E-2 Czech Republic 2 E-2 Denmark E-1 Ecuador E-2 Egypt E-2 Estonia E-1 Estonia E-2 Ethiopia E-1, E-2 Finland E-1, E-2 France E-1, E-2 Georgia E-2 Germany E-1, E-2 Greece E-1 Grenada E-2 Honduras E-1, E-2 India, L1A, Eb5 Iran E-1, E-2 Ireland E-1, E-2 Israel E-1 Italy E-1, E-2 Jamaica E-2 Japan E-1, E-2 Jordan E-1, E-2 Kazakhstan E-2 Korea (South) E-1, E-2 Kyrgyzstan E-2 Latvia E-1, E-2 Liberia E-1, E-2 Lithuania E-2 Luxembourg E-1, E-2 Macedonia E-1, E-2 Mexico E-1, E-2 Moldova E-2 Mongolia E-2 Morocco E-2 Netherlands E-1, E-2 Norway 7 E-1, E-2 Oman E-1, E-2 Pakistan E-1, E-2 Panama E-2 Paraguay E-1, E2 Philippines E-1, E-2 Poland E-2 Romania E-2 Senegal E-2 Singapore E-1, E-2, H1B-1 Slovak Rep E-2 Slovenia11 E-1, E-2 Spain E-1, E-2 Sri Lanka E-2 Suriname E-1, E-2 Sweden E-1, E-2 Switzerland E-1, E-2 Thailand E-1, E-2 Togo E-1, E-2 Trinidad & Tobago E-2 Tunisia E-2 Turkey E-1, E-2 Ukraine E-2 United Kingdom E-1,E-2 Yugoslavia E-1, E2

28 United Kingdom Canada, Australia Argentina Bolivia Colombia Uruguay Honduras Costa Rica Mexico Grenada Jamaica Germany Paraguay Spain Ecuador Panama

29 Substantial Investment Cash or Debt Instruments No specific investment amount Case by Case basis

30 Not Marginal Investment More than family support Sufficient income volume to hire US employees Create cash flow

31 Active Business: Real Estate Investing Create Company Purchase Real Property (Land, Residences, Apartments, Commercial, Businesses) Buying, Selling, Developing Real Properties

32 L1-A Intra-Company Transfer Visa

33 No Treaty Requirement- All Countries Eligible Employed one of last three years Management or Executive Branch or Affiliation with US Corporation Non US Corp. remains active Accompanying Relatives

34 Use for Real Estate Professional Company Owner Use for Small Companies Non-Treaty countries-e.g. Venezuela, Brazil

35 Privileges: Transfer to US and Work privileges Eligible for Priority Worker Status Travel unrestricted and remain to expiration Limitations: Work only for your employer/sponsor Visas up to 7 years-managers.

36 Branch, Subsidiary, Affiliate, Joint Venture Subsidiary: Company in homeland owns at least 50% Subsidiary: Need not be in the same business!

37 Don Gonzalez Professional Association 1820 N. Corporate Lakes Blvd Weston Florida DonGonzalezPA.US ABOGADO COLOMBIANO DE CONFIANZA! Certified International Investment and Immigration Specialty: Real Estate Investing as an Immigration Strategy (3 CE, GA/FL) Real Estate Investing through Pension and Retirement Funds(3CE, GA/FL) Bankruptcy: the Ultimate Foreclosure Defense (3CE, GA/FL) Death, Taxes and Real Estate: Estate Plan Issues (3CE, GA/FL)