germike

We are a young (43 and 42) retired couple thinking of buying a house in FL. We have been to the USA many times, before the VWP we had a B2 indefinitely visa. When the VWP started the B2 indefinitely was reduced to 10 year and has long since expired. After that we always went to the US on the VWP no problem.

However now we plan to purchase a house in FL and stay there for 5 months a year in one period. The rest of the year we will be living in Austria.

Is this common practice with a B2 and will they allow 5 month stay every year or is this too much ? Of course we could also select to live in spain all year but we don't really like it there.

remark : i really do not understand the US policies in immigration, they could attract lots of wealthy, non working retirees that help the economy and spend loads of $$ if only they had a retirement visa.

Ray

Thousands of retirees have winter homes in Florida and stay on a B-2 every year for up to 180 days....

TomFlorida

Germike,

I'm in a similar situation to you, early 'retired' and doing it. Like Ray says, it's not uncommon. But, you might also consider the tax implications for 'substantial presence', you can find it on the IRS website. A lot depends on how your retirement income is derived. The tax year starts Jan 1 and the 'presence' is in the tax year and nothing to do with the immigration "year". It's especially important if you are considering capital gain (even from your UK house) and US permanent residence.

Do you have kids to consider? Home schooling gets wearing.

It's an interesting situation retiring this early. The foreign options are not as wide as they appear initially.

Ray

Staying for 180 days a year has no tax implication

germike

Thanks for the tips, i also found out about the eb5 option. After initial enthousiasm i have doubts about that so also at looking at the 5 months in 7 months out option. Good that there are no tax implications.

As far as my house in the UK, i do not have one i am dutch and live in Germany However due to a new tax called the, get ready, "Abgeltungssteuer" i want to get out of Germany before 2009.

Apart from the eb5 my thought's on this are to sell my house in Germany, buy one in the sunny part of Austria bordering on italy to spend the summers. The 5 months okt-feb to spend in FL.

That is very true initially you think you have enourmous options but that quickly boils down to just a few possibilities, even now that the wole EU is there to explore. Allow me :

- Scandinavia : Winters too long, high taxes
- UK : rainy Pound too expensive
- France : france ?
- Spain : property market out of control houses build of rubbish

In the end we decided for the German speaking countries as this is the only other language apart from Dutch and English that we are fluent in.

Retiring early is not that much fun as you might think that it is, boredom quickly gets a hold of you. (I retired early due to a disability don't worry nothing deadly)

edit -- kids : none that i am aware of

TimFountain

Hmm, don't buy a house in the US then, they are all made out of wood and cardboard; one good hurricane will flatten them.

TomFlorida

Germike,

Good luck with it all.

You've probably looked at it anyway, but it is incorrect that there are always no tax implications to 180 days US presence if you do it repeatedly.

Ray

Explain what you mean Tom ....

TomFlorida

I'm not a tax attorney and cannot quote the law. Without going into my personal situation, and only after substantial tax consulting, I do know that there are some circumstances when liability arises because of the 'substantial presence' rules and when 'closer connection' cannot be used. It applied to income and also to capital gain.

You may well be right that for the general situation the tax position is fine.

But, not always and maybe tax advice needs taking by those considering 180 days on an ongoing basis.

germike

Thanks, and i am afraid that you are right, i found the IRS pages that you referred to earlier >here<.

With 5 months a year it comes to : 150 + 50 + 25 = 225 which will qualify you for a US residency. OMG what bunch of *#^(@ !

Most of the UK snowbirds probably are not aware (?) and do not file at the irs i guess.

To be 100% safe you would have to limit the stay to the US at 120 days a year, for a total of 180 fictional days in that 3 year period.

Ok that's it, forget about buying a house there as a 2nd home. For just 3,89 months a year it will be cheaper to rent a vacation home.

Never heard of any government which tries to pull such dirty tricks on it's visitors.

germike

Thanks, and i am afraid that you are right, i found the IRS pages that you referred to earlier.

With 5 months a year it comes to : 150 + 50 + 25 = 225 which will qualify you for a US residency. OMG what bunch of *#^(@ !

Most of the UK snowbirds probably are not aware (?) and do not file at the irs i guess.

To be 100% safe you would have to limit the stay to the US at 120 days a year, for a total of 180 fictional days in that 3 year period.

Ok that's it, forget about buying a house there as a 2nd home. For just 3,89 months a year it will be cheaper to rent a vacation home.

Never heard of any government which tries to pull such dirty tricks on it's visitors.

--edit-- With the 3,89 months, why bother to get a B2 just for the 0,89 bit. Just as well limit it to 3 months on the VWP saves the hassle of driving to Frankfurt. My retirement income comes from 2 pensions + capital (quite a lot). I do apologize for my "writing while i think style".

Ray

I disagree
If you are a nonresident alien visiting the United States only for pleasure, receive no income from U.S. sources, and are not engaged or considered to be engaged in a trade or business in the United States, you do not have to file a U.S. income tax return.

A person on a B-2 is considered a tourist and if the spend 180 days or less per annum their is no tax liability ..and even if they did on occasion go past those dates ..there is treaty agreement to avoid being taxed twice ..

I must know around a dozen people who stay for the 180 days every year
some for the last 20 years ..never been a problem ..

TomFlorida

As I said earlier, I'm not a tax attorney and certainly not in a position to argue points of law, only that I know my own circumstances required some changes for tax purposes as a result of advice from a reputable international tax law firm. Meaning, that there is at least one occasion, and I can't believe my circumstances are unique, when there have been tax implications to 180 days a year in the US on B2.

I understand the following (and if you think it makes sense all I'm saying is that you might need tax advice or to look more closely, I'm not an authority) which is partly derived from my attorney and also the IRS site:

Immigration Law and Tax Law are separate, status for immigration residency is separate from tax status (my point to Germike was just that, there may be an additional consideration to his time in the US other than just immigration days). As I understand it, what type of immigration visa you are on does not exempt you from tax liabilty.

Requirement for US tax liability is explained on the IRS site under 'substantial presence test' and to be substantially present you count all the days in the US this tax year (from Jan1), a third of last year and a sixth of the previous year and if they add up to over 6 months you may have liability. It equates to 120 days a (tax) year ongoing to be substantially present for tax purposes. It does not relate to the 180 days max for B2 visa under immigration law and the 'year' runs differently. I know it seems perverse.

If you do have substantial presence, which you would if in the US 180 days a year repeatedly, then you may not be US tax liable if you can demonstrate a 'closer connection' to another country (also defined on the IRS site) but if substantially present and with a 'closer connection' you are obliged to file a Form 8840 "Closer Connection Exception Statement for Aliens" to show why you have US tax exemption. My guess is that this situation covers most B2'ers.

If you have substantial presence and can't demonstrate closer connection then I believe you have tax liability but, of course, there is the tax treaty which MAY (and seemingly often does) depending on your circumstances exempt you from US tax. But not always.

Also, US capital gain liability depending upon (amongst other things) your US tax presence in the year of lawful permanent residence appliction, ie Greencard/EB-5 application (which Germike said he was considering in another thread), could leave you exposed to US CGT on your UK assets. (The major tax law firms specilaise in this immigration tax planning.)

I reiterate, I can't argue law it's just my understanding because my circumstances were a little unusual, but it may cause thought.

There seem to be many ways to remove US tax liabilty, one of which is tax treaty, but they are circumstance specific.

It does not surprise me that there are many 180 day, 'non-resident aliens' on B2's happily doing it every year without regard to US tax. I can't comment on whether or not they (rather than I) should be.

Germike, based on your most recent comments, I think it would be just a matter of getting your tax affairs straight rather than the taxation you might fear.

I appreciate that this is an immigration thread and I'll leave it there.

germike

That's a clear explanation thx !, after further reading it seems that there will be no extra income taxes for me as far as i can tell. Also i tend not to volunteer any info to any government and considering that i will be a visitor, tracking anything will be next to impossible especially when renting a vacation house for the duration instead of buying.

What i did find out is that buying is way more expensive than i originally thought. Not so much the price of the homes, they are cheap already and will be declining in the coming 1-2 years. It's more the tax/insurance/community charges. Very quickly : a nice house in Celebration will set you back 400k (next year 300k.. ?). Taxes will be 6k, insurance 4k, celebrations charges around 6k utilities 2k, maintenance 3-4k, interest lost on the 350k for a total of 35.500 usd or 26.300 euro. 5 months use, per month cost : 5.260 euro.

For 5260 a month euro i can fly to the us, rent a car, rent a house with pool and have 2.000 euro left. That's on a per month basis, i guess that i can get a substancial discount if i rent for 5 months at a time instead of 1.

TomFlorida

Germike,

You're right, rental is economic at the moment particularly with so much property on the market and prices probably falling. Just a couple of points though; if you're set on Celebration, I think Celebration has a minimum 6 month rental period, it's not a short-term zone, and it is one of the more expensive places in that area. But, there are lots of short term holiday rental options thereabouts We did that on our first 6 months in FL.