Hi Stevie2013, congratulations on becoming a PR in Hong Kong. I bet you must be very excited about attaining your residency and having the opportunity to invest like a ‘local’ would. I haven’t lived in the country for a couple of years now, but if you want to send me a PM about your thoughts and ideas of investing in HK, I may be able to share some ideas and information with you.

cheers, nyc88

Hello

This is an interesting thread. Rather than start a new thread, I'd thought I'll ask some questions here as my questions are similar to Royce's questions and my questions are also around's TerryW's strategy suggestions.

TerryW, your first response on the thread is very interesting. How would the strategy change, ie "Gift the money to a discretionary trust. Borrow it back later on to buy your PPOR. Have a loan agreement which gives an initial interest free period. Borrow 80% from the bank. Live in the property for 6 months, then move out. Rent it. You can still claim it as the main residence, but get all the deductions" if the individual's annual taxable income is around $80,000 per annum (marginal tax rate of 34%)? The strategy does not vary significantly if the individual's taxable is significantly lower, does it?

I am eligible for the First Home Buyer's Grant as I haven't bought property as a principal residence before. I've bought an investment property in the past but have never claimed the FHB Grant.  I do not own any investment property at the moment. I'm not claiming any significant tax deductions so my PAYE employee tax liabilities are around the $18,000 per annum mark (this amount includes quarterly provisional tax as a family member's distributes her income to me so my $80,000 per annum threshold is used up in order to lower her taxable income from 38% to 34%).

I wish to continue to help out the family member lower her taxable income (or she would be paying a lot of tax on her income).

My objective is also to minimise my tax liabilities whilst saving as much as possible from my fortnightly income (presently, I am not minimising my tax liabilities, however, I'm saving my net salary income with much ease). I expect my income to remain at very similar levels for many years to come (that is, just under the $80,000 per annum mark) if I don't make any significant changes to my work arrangements and lifestyle. 

TerryW, you mentioned that the strategy diverts income into the trust which can then be distributed more tax effectively. 

Sorry for my ignorance, but when you say, 'Gift the money to a discretionary trust', how much do you suggest I gift to a discretionary trust? 20-30% of the purchase price of the home?  And then borrow 70-80% from the bank, is that how it works? 

Thank you

Jay, great post….love it.

So only the minority of renters in the US living in homes (under $100,000 market value) own bank accounts….say around 20% of renters, if one is to generalise?

Hi Cocam, hehe…..no, I don't work for Wells…..I thought that by asking an open-ended question, I might some interesting comments from you and I did…..some of your comments are funny (and cute). Yes, I agree….the bank accounts have many numbers (too many) and some of the Wells customer service staff are robotic. Overall though, I find them polite.

So when the auto-voice asked you for your ATM card pin, did you give it? Yes? (I haven't used this function yet).

Hi USA Investor, I recall reading one of your posts from several months ago and you mentioned that you used Google Voice. I tried to set it up but it didn't work…..I must try again. I don't need an 'invitation' to get a Google Voice account, do I?

best regards

Hi Cococam, thanks for the information. ..its useful to know…..I've always wondered about the toll-free line for business accounts with Wells Fargo. 

Have you been satisfied with the level of service provided by the phone customer service team at Wells?

cheers

BMH and Mary, if you are interested investing in Florida, I would highly recommend Judith Ottosen (an Australian), a licensed realtor and property manager based in Fort Myers. 

Here are her details:

Judith L Ottosen

Tall Poppy Real Estate, LLC

http://www.tallpoppyrealestate.com

All the best

Hi Ziv, this is a very well written article…..well done!

In order to open an bank account with HSBC USA, first you have to qualify as a Premier client with HSBC in your home country (whether it is Australia, Canada, Singapore or the UK, to name a few countries). In Australia, to qualify as a Premier client, you would need to have AUD$200,000 in cash deposits with them (this amount can include investments like managed funds) or AUD500,000 of loans with the bank in Australia itself.

If you do not wish to park $200,000 with HSBC, then you may be able to open an account with them to have Premier status for a fee – you need to check this though, as I’m not entirely sure myself.

The question you need to ask is if you are able to get an account opened with HSBC USA as a Premier client, are you required to park US$100,000 (can be made up of both cash and investments) in the US, in addition to the AUD200,000 in HSBC Australia (assuming Australia is your home country).

Brent, I know that HSBC offer loans for a second home but it is very likely that one would have to hold a visa that enables them to stay longer than the 90 day tourist visa. Do they offer loans for rental properties? You may wish to read British Buyer’s thread, Miami (Ad)vice on this forum for his experiences with HSBC.

Hi Stu82, Sall94 and WorldInvestor,

The US-based accountant said that many countries recognize an LLC as a “corporation” for tax purposes – while the United States recognises it as a look-through entity. In situations involving many other countries using an LLC can raise the worldwide effective tax rate of the investor to more than 55% when compared to something more traditional, like a US limited partnership.

WorldInvestor, again, thanks for sharing – I find your structure involving loans against LLCs interesting. May I ask you some questions using the $500k loan scenario to an LLC, if it okay:

Lets us assume you have personally lent $500,000 to your single-member LLC and that you have purchased seven properties (spending approximately $71,000 for each property). You personally charge interest at 10% – this amounts to $50,000 per annum. You pay withholding tax in the US on interest only, which is $50,000 x 10% = $5,000 pa.

If you have seven properties in the US (for simplicity, lets say, in Atlanta) with each property yielding a net income of $5,500 pa after all expenses have been taken into account but before the interest charges of 10% is applied (yes, I am being conservative here about $5,500 pa net income per property). Seven properties multiply by $5,500 pa = $38,500 per annum.

So WorldInvestor, as you saying that as a consequence of applying the interest charges, in this example, the properties will be negatively geared by $11,500 (that is $38,500 – $50,000 = $11,500)?

If the above is correct, then no US tax is payable, and the tax loss of $11,500 incurred on the US tax return can be deducted from the person’s Australian gross total taxable income.

If you pay withholding tax of $5,000 on the interest charges on your US tax return, you could claim this amount as a tax credit against tax payable on the Australian tax return, couldn’t you?

Thank you for your time.

Matt, you’ve asked some interesting questions. I’ll private message you with a statement made by an accountant whom I wrote to recently…