Real Estate & FBAR – Is Real Estate Ownership Included on the FBAR?
Real Estate & FBAR questions are very common, and we receive them quite often. There are typically three (3) situations in which Real Estate must be evaluated to determine whether or not it is included on the FBAR.
Here is a summary of the three (3) most common situations involving the FBAR and Real Estate:
Example 1: Direct Ownership of Foreign Real Estate
When a person owns real estate directly (Commercial or Residential) it is not included on the FBAR — even if it is being used as a Rental Property.
If it is being used as rental property, the property is listed on IRS Form 1040, Schedule E — including the income and expenses — but the actual ownership of the property is not included on the FBAR.
Example 2: Foreign Business that Owns Foreign Real Estate
If you have ownership in, or interest in a foreign business — such as a Sociedad Anonima or Panamanian Foundation, the ownership of the Foreign Corporation/Business Entity is not included on the FBAR. But, the ownership is included on the Form 8938 or Form 5471/8865 — depending on various factors beyond the scope of this FBAR article. (For more one Form 8938 basics, please click here).
Example 3: REIT (Real Estate Investment Trust) & Other Investments
Here is where it gets more complicated: There are many, many different types of investments around the globe. Some of these investments, might be Mutual Funds, ETFs, and other related funds, which are bundled with real estate — or, it may be and entire fund based on Foreign Real Estate.
If you have an investment in a Real Estate Investment, and the investment has an account number — then it is typically included on the FBAR. Just like an investment account with Foreign Mutual Funds or other equity funds are included on the FBAR, a real estate investment fund would also be included on the FBAR.
Out of Compliance for FBAR Reporting?
Presuming the money was from legal sources, your best options are either the Traditional IRS Voluntary Disclosure Program, or one of the Streamlined Offshore Disclosure Programs.
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Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.