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U.S. REALTORS® with foreign clients that own U.S. property (or looking to buy U.S. property) should take note of the a recent IRS Fact Sheet (Sept. 16) which addresses requirements for compliance on two fact patterns involving non-U.S. sellers of real estate. One example extends the FIRPTA (Foreign Investment in Real Property Tax Act) requirements beyond basic land and improvements contexts. The second describes a transaction the IRS will treat as tax avoidance with all the attendant penalties and other burdens. Steven Cantor, CIPS, has authored several articles for NAR's Global Perspective publication that address FIRPTA. Search the Global Perspective archives by "author" to access these articles. Brokers looking to introduce agents to basics of representing foreign clients can download a free prepackaged sales meeting kit on International Tax Identification Numbers (ITINs), which uses a fun crossword puzzle to teach must-know information on representing foreign purchasers of U.S. property. View all available international prepackaged sales meeting kits.
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$200 billion is the price tag being bandied about for Hurricane Katrina's cleanup tab. Debates continue on how to pay for this...budget cuts...tax increases..., but one sunny spot for U.S. taxpayers is that foreign investors may cover much of the cost. According to a Sept. 21 Washington Post article, investors abroad poured $101.4 billion into the U.S. in July, and foreign purchases of U.S. stocks and bonds have nearly doubled since May, with Asian nations leading the pack. Japan is the largest creditor, holding $683 billion in U.S. government debt, followed by China, whose stake tripled this year to $242 billion from $72.4 billion in 2000. All this has helped fund major government initiatives while keeping interest rates low. Economists disagree on whether the U.S. can continue to incur debt without a negative impact on interest rates and the overall health of the economy. Michael P. Dooley, a senior adviser at Deutsche Bank-NY, argues that conventional wisdom of fiscal deficits making the economy vulnerable to a downturn doesn't fit the current scenario, and that Asian investment actually guards against the prospect of a U.S. downturn. Serious students of economics can read Dooley's theory. One interesting side note re Katrina and the real estate market is that the hundreds of billions in federal rebuilding money has resulted in a mini real estate boom in the region due to investors and speculators. Listen to a Marketplace report on American Public Media online.
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Mealtime customs and table manners vary from country to country, including use of utensils (which ones, which hands, none at all?), table requests (asking for more, asking for condiments, etc.), and thanking the cook. This fun, International Dining Etiquette Quiz will help you assess your knowledge of global dining customs. General areas of cross-cultural dining etiquette to consider in preparation for dining with foreign clients (whether your hosts or guests), are outlined at Sideroad.com (provides information from topic experts), and include seating, conversation, body language and more. The site also offers specific examples for dining in Japan, Germany, Turkey and the Middle East. Further research can be done for other countries. Bon appetite!
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Closing gifts are a common part of the U.S. real estate business practice, and the gift is often commensurate with the value of the property. U.S. agents who want to extend this practice to foreign clients, or who have other occasions to present a business gift, may first wish to learn more about what gifts are appropriate (or about the appropriateness of gifts in general). For example, in Mexico, gifts are not expected, but are appreciated, however expensive gifts are seldom appropriate. Also, you would not want to send yellow flowers, as this signifies death. If your clients are French, discretion would be the norm, and you should not include you business card with the gift. Learn about gift giving cultural customs and tips for 45 countries worldwide at ExecutivePlanet.com. REALTORS® who do regular business with clients from a country or region may also wish to joint one of the site's online discussion groups to use as a resource when you have business culture questions.
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REALTORS® working with U.S. investors wanting to expand their portfolio to include foreign property holding can provide current market overview reports for a range of global markets (cities, regions and countries). NAI Global, a provider of commercial real estate services, prepares an annual Global Market Report which includes comprehensive data on vacancy rates, property rents, space absorption, construction activity, markets attracting corporate relocations and more. The report is available for purchase ($695 per copy), but brokers and sales agents seeking a "snapshot" of market information can enjoy free downloads of property reports for the U.S., Canada, Europe/Middle East/Africa, Latin America & The Caribbean, and the Asia Pacific regions. Reports include data on commercial market conditions, forecasts, investment structure and activity, acquisition and tenant costs, landlord and tenant constructs and more.
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Foreign direct investment (FDI) in the new European Union states in Central and Eastern Europe (CEE) jumped by 70% last year according to a new UN report while FDI dropped 40% (lowest level since 1998) in the "old" 15-member EU states. Germany, the Netherlands and Luxembourg accounted for 95% of the decline. The 2005 World Investment Report, issued by the UN economic think-tank UNCTAD, shows that FDI in the EU as a whole dropped 36% to 216 billion dollars. FDI flows to Lithuania quadrupled and doubled in Latvia. As in past years, however, Poland, Czech Republic and Hungary received the most foreign cash in the region. Between 1995 and 2004, FDI to the new member states grew five-fold, which is almost twice as fast as world-wide investment growth. Germany, the Netherlands, Austria and France are the biggest CEE investors. An overview of the report's European analysis is available in a Sept. 30 article in the EU Observer. The U.S. remains at the top of the UNCTAD report list, drawing almost $100 billion in FDI, which does not include a projected $1,600 billion in U.S. dollars and securities held by some Asian central banks (note related item under Foreign Investments in this eReport). Read further analysis of the UNCTAD report as it pertains to the U.S. market at World Peace Herald.
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The 2005 edition of the European Tax Handbook was published in August and is available for ordering. Real estate companies who assist clients with property investments in more than 40 European countries, or the UK, USA or Canada, may find this to be a helpful reference tool. Also includes information helpful for individuals planning to re-locate or who inherit property in one of the aforementioned countries. Includes categories on real estate taxes, foreign income and capital gains, foreign capital, inheritance taxes, and more for foreign residents, nonresidents and expatriates. View a sample page, a full table of contents, or information on price and ordering instructions. Available from the International Bureau of Fiscal Documentation.
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Help clients who are looking to purchase abroad, but are not sure where, by providing some basic comparison of key country features. For example, in seconds, you can create a table that shows the total area, total land and total water for up to 10 countries using the "Country Comparator" tool at the GlobalEdge website. Additional comparative data fields includes land boundaries, coastlines, trade, employment, GDP, literacy, life expectancy, and many more. The tool allows you to compare up to 10 countries with as many as 5 data fields. The source of all data is the 2004 CIA World Factbook. GlobalEdge created by the Center for International Business Education and Research at Michigan State University.
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Report compiled by NAR International Operations, narglobe@realtors.org.
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Intl. Web Site of the Month: Chicago Association of REALTORS®
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Upcoming Intl. Events
 | Barcelona Meeting Point / Barcelona, Spain |
| Chicago Association of REALTORS® International Expo / Chicago, IL, USA |
| NAR 2005 REALTORS® Conference & Expo / San Francisco, CA, USA |
| 3rd International Housing Conference of the Americas / Mexico City, Mexico |
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Featured CIPS Course
CIPS Institute (Europe, Americas, Asia and Finance) in Lansing, MI, November 14-18
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NAR Global Partners:
Portuguese Real Estate Professionals and Agents Association (APEMIP), the newest member of the International Consortium of Real Estate Associations. APEMIP information is now available at the Consortium web site, www.worldproperties.com.
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