Financing Property Investments With Gifts
Wealth management seems like it would just be a lot of fun. Wealth is nice and it’s always pleasant to manage something that’s fun, but in reality, managing what you have earned over the years and not having it eaten up by taxes is not something for the faint of heart. Generally speaking, inheritance tax can run as high as 40%!
Of course, people with enormous wealth generally have an army of financial advisors who explain how to gift over $11 million (USD) to each child without tax and how trusts should be set up to help grandchildren better manage their inheritance, but what about individuals who have done well over the years, saved and invested, but haven’t reached the one percent!
An open conversation about inherited money is not always easy. Some children feel “owed” and others don’t want to think about parents not being around for the grandchildren and life’s milestones. With the stock market and real estate investments at an all-time high, now might be the time to start divesting wealth and enjoying it together–tax-free.
In 2021, each US citizen may gift up to $15,000 to any individual. Any amount beyond that would involve using part of the lifetime federal gift tax exclusion, which is $11.71 million per person in 2021 but not more than $15,000 a year. So, a parent can grant each child up to $15,000 annually as well as each grandchild and to a spouse.
A married couple could therefore give $30,000 to each of their children and grandchildren and anyone else each year without beginning to use that exclusion. If you do exceed the annual exclusion amount, you’ll need to file a gift tax return and track the amounts given each year but stay within the $15,000. Consequently you can pass money along and enjoy it with the children and grandchildren.
According to a 2020 AARP survey 40% of grandparents say they have and will continue to take vacations with their grandchildren. Sometimes they even let the parents come along for a three generation affair. According to the research, the move for more family vacations is a result of families living hundreds of miles away and grandparents who are younger and healthier with disposable income.
“I could write them a check at Christmas, but then I wouldn’t get to enjoy it with them and build those bonds with the kids so they really know who I am,” said one of the research respondents. “Face Time will do for the rest of the visits, but we plan on two vacations a year.”
More and more grandparents are taking disposable income and gifting enough money to the children and grandchildren to purchase a vacation condonimum for the vacations. As the years go by, the investment appreciates and the memories grow–all tax free.
For example, a family with two children can put a tax-free down payment of $120,000 annually on a vacation home. With that kind of cash payment Empresas Bern will work out an interest plan for the balance starting at less than can be arranged with a bank or financial institution.
Because the Panamanian government has tax free incentives for purchasing real estate, the vacation home should come with years of no property taxes. To make the financial gifts even better, the vacation home can be rented during the year as an AirBnB, providing an additional revenue stream. So, not only do you have a vacation home purchased with tax-free income, it is now producing income while increasing in equity.
The ocean front twin towers of Royal Palm have a number of units located side-by-side so two units could be structured as a four bedroom family compound. When not being used as a four-bedroom unit, a hotel type door can be used and the property rented as two units. There are also some larger units remaining with sweeping balconies overlooking the Pacific Ocean.
Currently, there is a single unit in Coronado Bay, another residential tower on the Pacific Ocean, which comes standard with four bedrooms and is listed as a close-out since it is the only type of property of it’s kind remaining. It is in the expat hotspot of Coronado!
The option of purchasing a vacation home to be enjoyed by the whole family tax free with special financing from the developer, which comes with no property taxes and which can be a revenue stream during the endless sunny days and crashing waves is becoming more and more popular.
Let one of our sales professionals work with you to set your family up for years of bonding and smart investing. Contact us today by phone at 507.214.2376 or by email at email@example.com. Our website is: https://www.empresasbern.com/?lang=en
We’d love to show you around our beautiful country. Ask about our “Try Before You Buy” program!
Douglas HardyMarch 3, 2021 6:25 pm
If we ever get our income funded, we will come to Panama. Your post is excellent. Thank you. Doug
Jose Manuel BernMarch 20, 2021 1:21 am
We would love to see you Doug!
Douglas HardyMarch 5, 2021 3:49 pm
Great stuff! You can help me with one question: I have heard that the Chinese have bought the operation of the Panama Canal on the Colon end, and could control the flow through the canal. Is this so? Thank you very much for your help. Doug
Jose Manuel BernMarch 20, 2021 1:21 am
China is an important trading partner with Panama, just like most other countries around the globe including the United States, Singapore, European Union, Canada and Latin America. However, control of the Panama Canal—on both the Atlantic and Pacific sides—lies solely with the Panamanian Government. The Canal was turned over to Panama from the United States in 1999 and it has been successfully control and upgraded since that time. Many countries have a presence in the area because it is such an important transportation hub, but the Panama Canal is a strong economic engine for and under the control of Panama.