{"id":18888,"date":"2020-01-05T09:00:40","date_gmt":"2020-01-05T14:00:40","guid":{"rendered":"http:\/\/www.escapeartist.com\/?p=18888"},"modified":"2022-08-09T13:55:45","modified_gmt":"2022-08-09T18:55:45","slug":"best-foreign-investments-self-directed-ira","status":"publish","type":"post","link":"https:\/\/staging.escapeartist.com\/blog\/best-foreign-investments-self-directed-ira\/","title":{"rendered":"Best Foreign Investments for a Self Directed IRA"},"content":{"rendered":"<p><span style=\"font-weight: 400\">The reason to set up an international self-directed IRA is that you want to take control of your investments. You want to buy in the best foreign investments to maximize returns to your retirement account. You want to become the investment advisor and search out unique and high returning investments. You want to earn more than a boring US index fund offers. You might even want to protect your retirement savings by moving it out of the United States and by diversifying out of the US dollar. <\/span><\/p>\n<p><span style=\"font-weight: 400\">In order to take control over your retirement account, you must first set up a self-directed IRA. And this account must be at a US custodian <a title=\"experienced in offshore transactions\" href=\"https:\/\/www.escapeartist.com\/international-self-directed-ira\" rel=\" nofollow\">experienced in offshore transactions<\/a>. While several firms offer self-directed accounts, very few allow international transfers. <\/span><\/p>\n<p><span style=\"font-weight: 400\">For most, setting up a self-directed account simply means moving from your traditional custodian to one that allows for foreign investments.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><strong>Where We Are Going In 2022<\/strong><\/h2>\n<p><span style=\"font-weight: 400\">The most popular foreign investment for self-directed IRAs in 2021 was <a title=\"international real estate investments\" href=\"http:\/\/www.escapeartist.com\/realestate\/international-property-investments-sale\/\" target=\"_blank\" rel=\"noopener noreferrer\">international real estate investments<\/a>. In this category, people tend to focus on condominiums and single-family homes which they plan to rent out. Some buy commercial real estate and a few purchase raw land which they plan to hold or build on. <\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">When you improve raw land, just remember that all the money for the project should come from your IRA. <\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">You and your friends can partner together on larger real estate deals such as hotels and office buildings.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">Yes, an IRA can legally own real estate and a lot of other alternative investments. Going into 2020 top investments for self-directed accounts include private equity, promissory notes, physical gold and certain gold coins, oil and gas, and cattle. Your IRA can\u2019t own insurance, collectibles or stock in S corporations.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The way to find the best foreign investments for your self directed IRA in real estate is to <\/span><b>balance expected returns (rental income and appreciation) with the capital gains tax you will pay in the country<\/b><span style=\"font-weight: 400\">. <\/span><\/p>\n<p><span style=\"font-weight: 400\">When you <a title=\"buy real estate abroad\" href=\"http:\/\/www.escapeartist.com\/realestate\/buying-international-real-estate\/\" target=\"_blank\" rel=\"noopener noreferrer\">buy real estate abroad <\/a>with your personal savings (after-tax money and not an IRA account, you should look for properties in countries with a capital gains rate of 20% or less. That\u2019s because you\u2019ll pay a maximum of 20% (more on this in a second) on long term gains no matter where you live and no matter where the property is located.<\/span><\/p>\n<p>In 2019 and 2020 the capital gains tax rates are either 0%, 15% or 20% for assets held more than a year. Capital gains tax rates on most assets held for less than a year correspond to ordinary income tax brackets (10%, 12%, 22%, 24%, 32%, 35% or 37%).<\/p>\n<p>Because long-term capital gains tax is a tax on profits from the sale of an asset held for more than a year, long-term capital gains tax rates are 0%, 15% or 20% depending on your taxable income and filing status. They are generally lower than short-term capital gains tax rates.<\/p>\n<p><strong>Long Term Capital Gains\/Income levels:<\/strong><\/p>\n<p>0%\u00a0 \u00a0= $0 to $39,375<br \/>\n15% = $39,376 to $434,550<br \/>\n20% = $434,551 or more<\/p>\n<div>\n<div class=\"gmail_signature\" dir=\"ltr\" data-smartmail=\"gmail_signature\">\n<div dir=\"ltr\"><\/div>\n<\/div>\n<\/div>\n<p><span style=\"font-weight: 400\">This means that the highest capital gains rate you\u2019ll pay on the sale of foreign real estate is 20% (if you are in a higher income bracket). Remember, US citizens are taxed on worldwide income and it is your responsibility to declare your income on all income you make throughout the year. When you sell a foreign property, you\u2019ll pay the US long term rate of 20% to the IRS. Then you get a dollar for dollar credit for any foreign taxes paid. <\/span><\/p>\n<p><span style=\"font-weight: 400\">For example, Colombia has a capital gains rate of 10%.<\/span> So i<span style=\"font-weight: 400\">f you sell a property in Colombia that you\u2019ve held for at least 2 years, you\u2019ll pay 10% to Colombia. Then, when you file your US return, you\u2019ll report the gain and use the Foreign Tax Credit to get a credit for the 10% paid to Colombia. The result is that you\u2019ll pay 10% to the IRS (20% US rate minus the 10% paid to Colombia, for a total global tax rate of 20%). <\/span><\/p>\n<p><span style=\"font-weight: 400\">So, again, when investing non-IRA funds, you want to look for countries with a capital gains rate equal to or lower than the US rate. The list of countries with capital gains rates of 20% or less is quite significant. See: <\/span><a href=\"https:\/\/en.wikipedia.org\/wiki\/Capital_gains_tax\" target=\"_blank\" rel=\"nofollow noopener noreferrer\"><span style=\"font-weight: 400\">Capital Gains Tax by Country<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Because you pay zero US tax on money deposited into your retirement account, and assuming returns are equal between countries,<\/span><b> the best foreign real estate investments for your self directed IRA will be in countries with a zero capital gains rate<\/b><span style=\"font-weight: 400\">. That is to say, any capital gains tax paid will reduce your net returns and won\u2019t give you a corresponding US tax credit\u2026 so, it\u2019s money wasted.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><strong>Most Popular Countries<\/strong><\/h2>\n<p><span style=\"font-weight: 400\">The most popular countries with zero capital gains tax include New Zealand, Hong Kong (even though the country is a mess it still has zero percent if held for at least 36 months) and Belize. Most of the other countries with no capital gains rate are in the <\/span><a href=\"https:\/\/www.globalpropertyguide.com\/Caribbean\/Belize\/capital-gains-tax\" target=\"_blank\" rel=\"nofollow noopener noreferrer\"><span style=\"font-weight: 400\">Caribbean<\/span><\/a><span style=\"font-weight: 400\">. <\/span><\/p>\n<p><span style=\"font-weight: 400\">Another best foreign investment with a self-directed IRA is <a title=\"Panama hardwood\" href=\"https:\/\/www.escapeartist.com\/blog\/teak-markets-in-panamain-2020\" target=\"_blank\" rel=\"noopener noreferrer nofollow\">Panama hardwood<\/a>. Your retirement account can buy a parcel in a teak plantation and you can pair it with a residency with a path to citizenship in 5 years. You\u2019ll need to pay residency fees from your personal account. You can\u2019t receive an indirect benefit from your retirement account, thus you need to cover some expenses from your savings. <\/span><\/p>\n<p><span style=\"font-weight: 400\">This program is only available to US citizens and citizens of the \u201c50 friendly nations.\u201d For a list of those countries, and more information on this program, see: <\/span><a title=\"How to get Residency in Panama Using Your IRA.\" href=\"https:\/\/www.escapeartist.com\/blog\/heres-get-residency-panama-using-ira\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400\">How to get Residency in Panama Using Your IRA<\/span><span style=\"font-weight: 400\">.<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400\">Then there are clients that want to trade their own accounts or invest in cryptocurrencies. These active traders need to form an <\/span><span style=\"font-weight: 400\">offshore LLC or IBC<\/span><span style=\"font-weight: 400\"> in addition to moving their accounts to a self-directed custodian that allows for international investments. Because this adds about $3,500 to your startup costs, you should be committed to these investments before moving forward.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><strong>Conclusion<\/strong><\/h2>\n<p><strong>I hope you enjoyed this article: Best Foreign Investments for a Self Directed IRA. <strong style=\"text-transform: initial\">T<\/strong>o talk to our partners about your <a title=\"SDIRA\" href=\"https:\/\/www.escapeartist.com\/international-self-directed-ira\" target=\"_blank\" rel=\"noopener noreferrer nofollow\">SDIRA<\/a>, please reach out to them here.<br \/>\n<\/strong><\/p>\n<p><strong>If investing in Panama Teak interests you, take a look at the information provided by <a href=\"https:\/\/info.ecidevelopment.com\/gap-nica-teak-1\" target=\"_blank\" rel=\"noopener noreferrer\">Teak Hardwoods<\/a><\/strong><\/p>\n<p><strong>And lastly, if you are thinking about residency in Panama, please <a title=\"contact us\" href=\"https:\/\/www.escapeartist.com\/residency-panama\" target=\"_blank\" rel=\"noopener noreferrer\">contact us<\/a> here and we will be happy to make an appointment to talk about Panama. In the meantime, here is a great <a href=\"https:\/\/hubs.ly\/H0h5j3q0\" target=\"_blank\" rel=\"noopener noreferrer\">country guide<\/a> about Panama.<\/strong><\/p>\n<p><strong>Here are a few articles that may help you understand Self Directed IRA:<\/strong><\/p>\n<p><strong><a class=\"LinkSuggestion__Link-sc-1mdih4x-2 jZPuuT\" title=\"Making Teak a Part of your SDIRA: Guidelines to Financial Prosperity\" href=\"https:\/\/www.escapeartist.com\/blog\/making-teak-a-part-of-your-sdira-guidelines-to-financial-prosperity\" target=\"_blank\" rel=\"noopener noreferrer\">Making Teak a Part of your SDIRA: Guidelines to Financial Prosperity<\/a><\/strong><\/p>\n<p><strong><a class=\"LinkSuggestion__Link-sc-1mdih4x-2 jZPuuT\" title=\"3 Ways to Use a Self-Directed IRA\" href=\"https:\/\/www.escapeartist.com\/blog\/3-ways-use-self-directed-ira\" target=\"_blank\" rel=\"noopener noreferrer\">3 Ways to Use a Self-Directed IRA<\/a><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The reason to set up an international self-directed IRA is that you want to take control of your investments. You want to buy in the best foreign investments to maximize returns to your retirement account. You want to become the investment advisor and search out unique and high returning investments. You want to earn more [&hellip;]<\/p>\n","protected":false},"author":308,"featured_media":31705,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","om_disable_all_campaigns":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1401,562],"tags":[56,1136,366,8190],"yst_prominent_words":[17708,15664,17198,5227,2937,9889,3054,17705,15661,6779,15665,5593,17707,17597,17706,17704,17199,1878,3023,4540],"acf":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/staging.escapeartist.com\/wp-content\/uploads\/2018\/05\/beach-2090181_1280.jpg","_links":{"self":[{"href":"https:\/\/staging.escapeartist.com\/wp-json\/wp\/v2\/posts\/18888"}],"collection":[{"href":"https:\/\/staging.escapeartist.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.escapeartist.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.escapeartist.com\/wp-json\/wp\/v2\/users\/308"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.escapeartist.com\/wp-json\/wp\/v2\/comments?post=18888"}],"version-history":[{"count":22,"href":"https:\/\/staging.escapeartist.com\/wp-json\/wp\/v2\/posts\/18888\/revisions"}],"predecessor-version":[{"id":46288,"href":"https:\/\/staging.escapeartist.com\/wp-json\/wp\/v2\/posts\/18888\/revisions\/46288"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.escapeartist.com\/wp-json\/wp\/v2\/media\/31705"}],"wp:attachment":[{"href":"https:\/\/staging.escapeartist.com\/wp-json\/wp\/v2\/media?parent=18888"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.escapeartist.com\/wp-json\/wp\/v2\/categories?post=18888"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.escapeartist.com\/wp-json\/wp\/v2\/tags?post=18888"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/staging.escapeartist.com\/wp-json\/wp\/v2\/yst_prominent_words?post=18888"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}