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
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Sponsors

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.