My friend Bob started this thread, actually, on his Living in the Philippines web magazine site, when he talked about ideas of things he could invest in now that would be there in the future as something for a family legacy.
I’ve written about this several times already and while I was out walking yesterday I snapped a picture of the progress on the new townhouse/apartment project I have been following nor for a while … owned by the same fellow who put up the complex I first wrote about a few months back.
Wall Down, Working on Parking Spots
I don’t know yet how much these units are going to go for … as far as I know they are going to be straight rentals and not being sold as condos, but I feel the project definitely enhances my neighborhood.
And in spite of all the hugely overblown news you hear about a “lending crunch”, the banks here in the Philippines are really going after business and home owner loans.
Interest rates and terms are not quite what Americans have grown used to over the past 20 years .. 15 to 20 years are typically the longest and you can expect to pay 12% or so, but then again, mortgages at artificially low rates on property at vastly over-estimated vales are a large part of what got the US in the current mess anyway.
By the way, for those of you from the US who might contemplate something like this now or in the future (of course I am not a tax professional, you should consult your own), according to my readings and to some other research I have done, the IRS does not care where your primary or secondary home is located … you still get homeowner tax breaks even if the property is in the Philippines.
Also, if you build something like this as an investment, I see no reason you don’t get all the normal tax breaks any other investor/property owner gets … including reasonable and necessary expenses to visit your income producing property, taxes, fees, and of course a credit for the Philippine tax which you would certainly be liable for.
Providing decent homes for people who need them and building a solid investment portfolio for your children (no ‘toxic paper” or up and down like a yoyo mutual funds) can not be an all bad thing to do.
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Philly have I missed something? Surely someone living in the US could not be the legal owner of an apartment block in RP and could therefore not claim any tax breaks in either country.
Hi Ken,
No, I don’t think you missed anything Ken, but in the interest of trying to avoid one of my multi-thousand word “book-length” posts I did not try to cover all eventualities. I’ve written at least a dozen posts here about who can and can not own land in the Philippines, so if when you say “a person living in the US” you mean an American citizen who is not a former Filipino or dual US/Filipino” then you are correct in assuming s/he can’t own “land” in his or her own right.
But what about a Filipino living and working in the US (my own landlord is in that category, he has lived and worked in the US for years now. Or what about a Phil-Am couple … the wide can own real property in her own name, either as a current citizen or a former Filipno citizen. Or who says you have to own the land to begin with? A huge percentage of income producing property, even in the US, is on leased ground … there are significant tax advantages to many companies in _not_ owning real property, and a foreigner can legally lease all the real property s/he cares to in the Philippines.
(This is also a way to make the investment required by the SRRV program which gives you a lifetime visa to live in the Philippines, if you intend to live in the leased property).
Leases can be bought, sold, traded and willed to heirs and assigns just like other possessions in most cases (see your legal adviser for all these statements as I already disclaimed in the article).
There’s at least three examples I can think of, off the top of my head, of legal ways different people “living in the US” could do something similar, making some small (but steady) income, providing decent housing for a market that sorely needs it, and (literally) building something for the future.