FORTUNE Small Business:

Tax pitfalls of investing in foreign real estate

An S-Corp can invest in foreign real estate if the property is for business - but here are some caveats to consider.

Subscribe to Top Stories
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

foreign_currency_pile.03.jpg
Ask FSB
Get small-business intelligence from the experts. Here's a chance for YOU to ask your pressing small-business questions, and FSB editors will help you get answers from the appropriate experts.
Your name:
* Your e-mail address:
* Your city:
* Your state:
* Your daytime phone #:
* Your questions:

(FORTUNE Small Buisness) -- Dear FSB: Can an S-Corp invest money into foreign real estate and consider that a business expense?

- Sanjay, San Jose

Dear Sanjay: According to Walter Robinson, from Walter Robinson & Associates, a Chicago firm that provides tax and accounting services to small businesses, a U.S. S-Corp may invest in foreign real estate as long as the property is for business use.

The investment itself, however, cannot be considered a current business expense, though you can claim the expenses generated from operating the property, as well as its depreciation. You should be aware that the rate at which foreign property is depreciated is different from domestic property.

Foreign real estate holdings may also expose you to foreign taxes, so you will need to calculate the foreign tax credit. And you will have to account for changes in the exchange rate between dollars and the foreign currency.

Understanding the taxes and tax credits surrounding these kinds of investments can be complicated, so Robinson strongly suggests that you consult a tax advisor who is familiar with foreign real estate holdings.  To top of page

Have you invested in foreign real estate for business or personal use? Talk back here.

How to survive the real estate market
Sell to rent
Who would buy real estate in this market?
Photo Galleries
Graffiti about crisis fills Athens' streets Artists are taking to the streets to express their views on the Greek crisis. More
My whirlwind 24 hours in Taiwan as a bridal supermodel Unlike the West, Taiwanese brides-to-be sit for hun sha ?? photo sessions before their actual wedding day. The photos are seen as a status symbol as well as a way to capture the brides' youth and glamor. More
8 startups that'll make your travel experience so much better Here are the new travel apps and services that will make trips easier, less time-consuming, and more fun for the every day business traveler. More
Sponsors