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St. Kitts and Nevis Information
Invest in St Kitts or Nevis to Obtain a 2nd Passport
2010-02-09 00:21:39 by
According to Mark Nestmann, investment counselor, one of the best ways to internationalize your pension or retirement plan is to use it to purchase offshore investments, including offshore real estate. It's legal under U.S. law, although finding a cooperative custodian willing to let you buy the offshore investment can be a problem.
Nestmann explains that if you use your retirement plan to purchase real estate in the Confederation of St. Kitts & Nevis, you can leverage your investment to also obtain a second passport. You must purchase "qualifying" real estate on one of these islands, but there are numerous developments from which you can choose. The minimum value of a qualifying property is $350,000. Taxes and fees add a minimum of $90,000 to this cost, and you'll need to pay them out of your own pocket, not your retirement plan.
This strategy works for self-directed IRAs and 401(k) plans, along with some defined benefit plans. It won't work if your plan prohibits offshore investments.
There are 2 caveats according to Nestmann:
1. You can't live in the property you purchase through your retirement plan. You can rent it out and any income generated accumulates on a tax-deferred basis. When you retire, you can make a distribution of the property to yourself and then live there, if you so choose. This is a taxable event if you funded your plan with pre-tax dollars. In addition, if the rental income during the deferral period exceeds maintenance and other ownership costs, you'll pay tax on that income as well.
2. If you obtain a St Kitts and Nevis passport for eventual expatriation, "exit tax" law enacted in 2008 penalizes investments in retirement plans. Depending on what type of plan you have, you may have to pay tax on all pre-tax dollars in the plan when you expatriate. Alternatively, the plan administrator may have to withhold up to 51% of the untaxed portion of the plan when you receive a distribution. However, these taxes apply no matter what assets you own in your retirement plan if you expatriate. So, you're no worse off investing the funds in a St. Kitts & Nevis property than you would be otherwise.
This information is courtesy of Mark Nestmann, NestmannBlog. Check out his site for more information, www.nestmann.com. Contact an agent in our Coldwell Banker office for details on purchasing property on St Kitts or Nevis.
Nestmann explains that if you use your retirement plan to purchase real estate in the Confederation of St. Kitts & Nevis, you can leverage your investment to also obtain a second passport. You must purchase "qualifying" real estate on one of these islands, but there are numerous developments from which you can choose. The minimum value of a qualifying property is $350,000. Taxes and fees add a minimum of $90,000 to this cost, and you'll need to pay them out of your own pocket, not your retirement plan.
This strategy works for self-directed IRAs and 401(k) plans, along with some defined benefit plans. It won't work if your plan prohibits offshore investments.
There are 2 caveats according to Nestmann:
1. You can't live in the property you purchase through your retirement plan. You can rent it out and any income generated accumulates on a tax-deferred basis. When you retire, you can make a distribution of the property to yourself and then live there, if you so choose. This is a taxable event if you funded your plan with pre-tax dollars. In addition, if the rental income during the deferral period exceeds maintenance and other ownership costs, you'll pay tax on that income as well.
2. If you obtain a St Kitts and Nevis passport for eventual expatriation, "exit tax" law enacted in 2008 penalizes investments in retirement plans. Depending on what type of plan you have, you may have to pay tax on all pre-tax dollars in the plan when you expatriate. Alternatively, the plan administrator may have to withhold up to 51% of the untaxed portion of the plan when you receive a distribution. However, these taxes apply no matter what assets you own in your retirement plan if you expatriate. So, you're no worse off investing the funds in a St. Kitts & Nevis property than you would be otherwise.
This information is courtesy of Mark Nestmann, NestmannBlog. Check out his site for more information, www.nestmann.com. Contact an agent in our Coldwell Banker office for details on purchasing property on St Kitts or Nevis.