Offshore shell companies facilitate Florida land scams

Florida is the No. 1 state in the country for international residential real estate sales with almost one-third of the nation's foreign-backed property transactions.

Most deals are in cash.

However, Florida and the federal government may be left holding the bag, according to an investigative report from the Florida News Connection.

Some investors in the Florida housing market have found a way to avoid paying everything from state title transfer fees to federal capital gains taxes by going off-shore to places like a Caribbean island called Nevis.

The domestic housing bust made Florida properties appealing to overseas investors wanting to buy a house or condo in the Sunshine State, and 76 percent pay in cash. State and federal governments normally would get their cut of each transaction in fees and capital gains taxes.

A loophole is created when investors set up a shell company in an off-shore tax haven to buy a Florida condo.

R.M. Woodnutt, a former off-shore agent in Gibraltar, said tax avoidance is the name of the game.

"If you transfer the stock in the offshore company and do not actually sell the company or the real estate property outright, then you certainly avoid paying any taxes on the transaction. That is the beauty of all this," Woodruff said.

The Miami International Real Estate Congress claims foreign investment in South Florida is growing, and industry experts are predicting in 2012 there will be even more international interest in the area.

Creating an offshore company is simple, and can be done online: OffshoreFormations247.com specializes in creating shell companies to hide individual identities and assets. It is based in Nevis, a little Caribbean island just 200 miles south of Puerto Rico.

"A lot of people like Nevis 'cause it's quick and easy: three- to five-day turnaround to get a company back. For an LLC it costs only $1,295, a corporation is only $1,695. The only thing you need is name of the company, who the director will be and where to send it."

The offshore company buys the property in Florida. When it goes to unload it, the bearer certificates of company ownership are transferred to the new owners. There is no record in Florida of a sell-buy transaction, so no transfer fees or capital gains taxes are ever paid.

Rosa Schecter, an international real estate attorney in Coral Gables, said buying Florida property normally requires slogging through a lot of red tape and paying thousands in taxes and fees.

"There are different kinds of taxes," Schecter said. "There are transfer taxes that are associated with every real estate transaction in Florida that you have to pay on a deed; there also are intangible taxes that are due on promissory notes, and documentary stamp taxes. If a property is sold and there is gain on it, obviously there is tax to be paid on that gain."

Such taxes and fees are never recorded because as far as Florida is concerned, the property never changed hands - the deed is still recorded in the offshore company's name. What did change hands was the stock in the offshore company, a transaction that need not be disclosed.

Most overseas buyers do not qualify for an exemption from capital gains taxes since the properties are not usually their primary residence. Forming an offshore company to purchase a house in Florida hides any record of the property changing hands, thus no capital gains are recorded on the tax rolls.

There are advantages for American citizens, too, like dodging debts, child support or alimony payments.

Several state and federal law enforcement agencies have been made aware of this off-shore scheme.

Further information is available at www.nevisisland.com and www.offshore.barclays.com.

Source: http://www.bocagrandetalk.com/page/content.detail/id/516371.html

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