The Aug. 12 article “First new condo towers delivered in Coconut Grove in a decade,” on the completion of the Grove at Grand Bay luxury condo project says that, “Foreign buyers receive legal tax breaks by owning U.S. properties through offshore companies.” In fact, there is no “break.”
Use of an offshore company is required to protect foreigners from discrimination under a confiscatory U.S. estate tax, with a 30 percent rate on values above $100,000 and 40 percent above $1,000,000. Foreigners receive only a $60,000 per person exemption from the estate tax, while U.S. residents have a $5.45 million exemption.
The family of a foreigner who buys a $2 million condo without using an offshore company would have to fork over $745,800 to Uncle Sam upon the loss of their loved one, while an American family in that situation would have no tax. Most of the Panama Papers companies were formed to prevent what would amount to theft by the IRS.
Sign Up and Save
Get six months of free digital access to the Miami Herald