Legal Question in Real Estate Law in Maryland
foreign real estate investment
I'm an US citizen, my husband is a German citizen but has permanent residence status here in the U.S. We'd like to purchase an apartment in Germany and rent it out to his uncle. What are the tax and legal ramifications? Is it better for my spouses' mother to buy the property in her name (we supply the fund) and for my husband to receive it later as inheritance? What kind of attorney would be best? Thank you.
1 Answer from Attorneys
Re: foreign real estate investment
If you buy the property and rent it out to the uncle at a market-based rent, you can deduct all the expenses of maintaining the property on your tax return, including depreciation. Of course, the rent received is taxable income. But usually you will show a paper loss after depreciation, which acts as a tax shelter.
If you put the property in the aunt's name, there is no guarantee that the aunt will leave you the property in her will. In addition, there might be a gift tax applicable to your buying the property for another. I recommend you consult a tax attorney for more details.
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