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The biggest portal about international asset protection and diversification

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Why Purchase Property through an Offshore Company?

Worldwide, property sale and purchase transactions are nothing new. While some purchase property to invest, the others earn working capital therefrom.  In some cases, property is purchased for the buyers themselves. It is equally likely that property may be bought for the buyer’s relatives though. It is certainly used to protect assets and multiply capitals. 

Regardless of what your goals with property purchase are, you can own your property either directly or through a company. Direct ownership with transactions made by a natural person may be profitable short-term, say, due to lower taxes or laws that do not allow companies to purchase property in a certain jurisdiction.

Offshore real estate

For the long-term, however, the recommendation is to buy property through a company, preferably an offshore one. Learn why and how you can use an offshore company to benefit therefrom.

Why do you need an offshore company to make property transactions?

The very first answer to come to one’s mind is the easiest one. Property transactions made through an offshore company are profitable, especially if you sell property or transfer it by inheritance.

Benefits of offshore property transactions

Nearly everywhere, you will have to pay a capital gains tax if you make property transactions. If you sell property within a short time period of 3 to 5 years, the deal is subject to additional taxes as a speculative transaction or  real estate operations. 

With an offshore company, you are free to sell shares instead of property. An offshore company remains the property owner, while business owners who hold a trust or a holding company change. 

How to benefit from offshore inheritance transactions

In some jurisdictions, an inheritance tax may be as high as 40%. If either you or your heirs inherit property, oftentimes the amount to pay to the state in taxes and notary fees to document property ownership makes 50% or more of the property price.

Using an offshore company to execute inheritance transactions is much easier as you don’t need to pay most of the related taxes, and only standard legal and notary fees are inevitable.

Apart from money issues, international property inheritance is a tricky procedure in legal terms. The accession to heirship may be a lengthy and tiresome process, let alone truly expensive. Now imagine you inherit several property units in various jurisdictions each of which is governed by its own laws and regulations. In some cases, the risk of losing property is really high.

If property ownership is registered to an offshore company and property transactions are made through such a company, transferring assets by inheritance is greatly simplified. Company shares are distributed in equal proportions among lawful heirs or as provided for under the corresponding will. To tighten control over inheritance transfer procedures, not just offshore companies but offshore trusts as well come extremely handy. 

Property owned by an offshore company is not so easy to forfeit or seize through court or bankruptcy procedures. This is sure true only if an offshore company is duly structured. 

Offshore company profits and expenses resulting from property ownership

An offshore company that owns property is liable for property maintenance and is free to use the above assets to profit therefrom. Say, it may lease out residential and commercial property it owns.

Such offshore company shall pay property taxes as provided for under the laws of the jurisdiction where the property is located. Mind that we are referring namely to the jurisdiction that physically houses the said property and not the corresponding offshore state. The said offshore company is also in charge of utility payments. In many countries, non-payments may result in property seizure with the property being put off for auction as a result.

That said, you can get a bank loan to finance a new property purchase transaction. In case of companies, the terms are much more attractive compared to individuals. You may also benefit from services private banks render to get the lowest interest rate alongside with other bonuses.

Incorporation of offshore companies

Here’s what you shall do to set up an offshore company:

  1. make up your mind as to what jurisdictions you are about to make property transactions in
  2. decide on what funding sources you would like to use initially: personal finances, loans, or anything else
  3. choose the country or the territory to set up an offshore company
  4. prepare the necessary documents and pay incorporation fees
  5. set up an offshore company to make property transactions
  6. open a bank account for your offshore company
  7. make the first property purchase transaction.

In the above context, any foreign firm or business is considered an offshore company. These are not just businesses incorporated in traditional offshore jurisdictions. To make property deals, it is essential that you pick a highly reputed country. This is necessary to secure efficient cooperation with banks and lending institutions.

Although easy at first sight, company incorporation procedures come with many nuances, where property transactions are concerned. If not carried out by the book, they may result in various future difficulties, from bank or payment system account setup issues to it being totally impossible for the offshore company to transact. 

To be on the safe side, a professional consultation as to offshore company incorporation is invaluable. At International Wealth, we assist our customers with setting up companies not only in offshore jurisdictions but throughout the world. To hear from us in no time, you are welcome to fill in the contact form below.

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Reasons to purchase property through an offshore company

It is through an offshore company that you can optimize sales taxes, protect your assets, give greater freedom to your heirs, and protect your property from damage or loss. With just one instrument, you can secure more profitable financing terms and control assets globally. 

If willing to benefit from the above, you are encouraged to message us at [email protected] or call International Wealth to book your free initial consultation as to offshore company incorporation. Assisted by our top experts, you will successfully pick the most profitable property deals.

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