Foreign Real Estate Reporting and FBAR
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Foreign Real Estate Reporting FBAR
Foreign Real Estate Reporting FBAR: The FBAR is filed by US Persons to report Foreign Bank and Financial Accounts to FinCEN. There are a lot of misconceptions when it comes to FBAR (FinCEN Form 114 Filing). For example, many US account holders believe that only foreign bank accounts are reportable — but that is not true. In fact, foreign pension plans, retirement accounts, life insurance policies with cash values, and investment accounts are all reportable on the FBAR. But what about foreign real estate, is that reportable? Sometimes foreign real estate may be reported on the FBAR and sometimes it escapes the FBAR filing requirement.
Let’s go through some of the basics of foreign real estate FBAR reporting:
Foreign Rental Property (Individually Owned)
Even though a Foreign Rental Property is used to generate foreign income and may be considered an asset — it is not a foreign bank or financial account, so it is not reportable.
But, if there is a bank account associated with the foreign rental property and in a US persons name, the foreign bank account is reportable — even though it is associated with foreign rental property that is not reported.
Foreign Entity With Real Estate Property
While the entity itself is not reported on the FBAR, it may be reported on other forms such as FATCA form 8938 or the Form 5471 which is used to report foreign corporations. if for example, you had a Sociedad Anonima — it would be reportable even if the entity only contained foreign real estate.
Foreign REIT/REIT Funds
A REIT is a real estate investment trust. If it’s a fund such as a mutual fund or equity fund (e.g. REIT Fund), then it is equivalent to a mutual fund and generally reportable on the FBAR.
If the REIT is a fund is part of a larger account then you may get off easy by just reporting the main account number. If it’s just one of several different funds and is an individual fund — chances are you will have to report each individual fund. You may also have a form 8621 filing requirement (PFIC), noting the FBAR and Form 8621 are not mutually exclusive.
*A stand-alone REIT has to be evaluated to determine if it may fall into FBAR territory.
Foreign Real Estate FBAR Reporting is Complicated
In conclusion, when it comes to FBAR reporting for REIT (Real Estate Investment Trusts) and other foreign real estate, it can be very complicated and it is important to evaluate the type of real estate investment to determine if it has to be reported.
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