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As a homeowner, the first thing you'll sacrifice is privacy since Patriot Act's implementation the real estate transactions can be purchased like candy from the county offices across the nation.

One way to avoid this is a legal technique of a shell company. I'm not aware of how this works. I tried searching online but there isn't very useful info out there. I'm wondering if anyone in the FWF community has used this method and if so, can share details.

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The Planet Money podcast has done a few shows about "shell companies". If you listen to those it will give you a start. It has been a continuing topic on the show, so it went across a few episodes. Do you have a genuine reason to try and hide your assets (spouse), or are you just paranoid about the Patriot Act?

Episode 390
Episode 403
Episode 408

I am pretty sure that utility companies, etc are also selling info. We moved into a rental house last month and are receiving letters from local insurance brokers, banks, etc with "Welcome to the Neighborhood" language.

tennis8363 said:   I am pretty sure that utility companies, etc are also selling info. We moved into a rental house last month and are receiving letters from local insurance brokers, banks, etc with "Welcome to the Neighborhood" language.Did you fill out a "change of address" form at USPS? They sell your info. I don't think utilities sell it. Don't know about cell phone providers. Read their privacy policies.

OP - so you think an offshore corp is better than a land holding trust? You'll probably need all the money up front because nobody will loan to either one, and you have to be careful about the tax write-offs (property tax deduction), because if you don't own it, you can't write it off.

Shell firm or corporation aside, it is tough to even get a corporate or mortgage under a business name today. When I was looking to buy something, they refused to allow me to put it under a corporate name and instead wanted income and my own name on the mortgage.

The system in the USA is totally unfair and political policies which allow corruption and non meritorious practices allow this to happen.

grex23 said:   Shell firm or corporation aside, it is tough to even get a corporate or mortgage under a business name today. When I was looking to buy something, they refused to allow me to put it under a corporate name and instead wanted income and my own name on the mortgage.

The system in the USA is totally unfair and political policies which allow corruption and non meritorious practices allow this to happen.


It is tough but not impossible, if you already have an established cash flowing entity. Some will still want your personal guarantee regardless. Why is it unfair? If we had this earlier, it might help prevent the real estate crash. None of those 110% financing with nothing substantial to back it up.

You absolutely can get a commercial loan for real estate purchased by an offshore corporation or any trust.
Furthermore, if you elect disregarded entity treatment for the corporation, it is for tax purposes as if you owned it directly; and you may take appropriate deductions and even utilize the IRC121 capital-gain exclusion. If it is owned by a trust in which you retain a beneficial interest (which is certainly the case here), again for tax purposes it is as if you own it directly.

You should consider the practical issues you’ll have. You will want title-insurance, and the title-insurer will likely demand significant supporting documentation that will reveal your identity. You will want homeowners or other property insurance, and you’ll damn well want be to Named Insured regardless of who the property owner and policyholder is. Will these vendors keep your identity a secret? I suppose so, if you never have to make a claim. Finally, will you lose other benefits from owning the property indirectly rather than directly? In states with an unlimited Homestead
exclusion from creditor-claims, this is a big loss. In my state, property taxes rates are frozen in time, and it would materially impact me if in 30 years I can’t gift/bequeath my home to my children without the exclusion from reassessment of property values.

Your “welcome to the hood” packet is courtesy of the USPS Change of Address program. We as mail customers refuse to pay the real costs of administering the program, so advertisers get to pony up to fund it.

grex23 said:   Shell firm or corporation aside, it is tough to even get a corporate or mortgage under a business name today. When I was looking to buy something, they refused to allow me to put it under a corporate name and instead wanted income and my own name on the mortgage.

The system in the USA is totally unfair and political policies which allow corruption and non meritorious practices allow this to happen.

You should have whipped out your premium cards. They would have been begging you to take their money.

sesat said:   In my state, property taxes rates are frozen in time, and it would materially impact me if in 30 years I can’t gift/bequeath my home to my children without the exclusion from reassessment of property values.Couldn't you just change the beneficiary of the trust or the owner of the corporation? There would be no actual sale or transfer of property, why would there be a reassessment?

scripta said:   sesat said:   In my state, property taxes rates are frozen in time, and it would materially impact me if in 30 years I can’t gift/bequeath my home to my children without the exclusion from reassessment of property values.Couldn't you just change the beneficiary of the trust or the owner of the corporation? There would be no actual sale or transfer of property, why would there be a reassessment?

Almost all corporate owned real-estate in CA is passed by selling shell-corporations that have the real-estate as their only asset : this has the effect of a perpepetual freeze on corporate property tax rates, which every year is a smaller proportion of total property taxes collected in CA.

I am surprised more induviduals don't try the same trick in CA. Of course the benefit only accrues in the distant future (when you sell or pass on the property to your heirs) so most folks can't be bothered with the hassle. Of course if everyone did it CA would eventually have property taxes perpetually decreasing in real terms (since increases to existing owners are limited to 1%, which is below inflation rate).

Thank you Scripta and Ananthar for bringing up a significant issue here in California.

The quick answer is that the State of California requires reassessment upon changes of ownership. They also require you to report "changes in control" of the entity owner. This will, in general, apply when the beneficial ownership of the trust changes, and when significant ownership of the stock changes. Lookthrough rules apply of course, so that when I die and my children vest ownership in my trust that owns stock in an offshore corporation owns a domestic LLC that owns my house, there shall be a change in ownership.

Sadly, this does not affect most widely-held entities; just the kind of entities that you and me would use as intermediaries in real estate ownership.

California Revenue and Taxation Code section 64(c)(1) states, in pertinent part:

When a corporation, partnership, LLC, other legal entity, or other person obtains control through direct or indirect ownership or control of more than 50% of the voting stock of any corporation, or obtains a majority ownership interest in any partnership, LLC, or other legal entity through the purchase or transfer of corporate stock, partnership, LLC, or ownership interests in other legal entities, including any purchase or transfer of 50% or less of the ownership interest through which control or a majority ownership interest is obtained, the purchase or transfer of that stock or other interest SHALL BE A CHANGE OF OWNERSHIP of the real property owned by the corporation, partnership, LLC, other legal entity in which the controlling interest is obtained.

As you can imagine, Chevron is never going to get their refinery facility in Richmond reassessed. Clorox's headquarters in Oakland was never subject to reassessment, until they sold it to a private equity firm last week. The new owners of that building is now paying property taxes on its market value. The subsidy by closely-held property-owners towards widely-held property-owners is already taking its toll on local governments and family taxpayers.

Get a bottle of wine and check out the Assessors Handbook on the Board of Equalization website.

LiquidSilver said:   The Planet Money podcast has done a few shows about "shell companies". If you listen to those it will give you a start. It has been a continuing topic on the show, so it went across a few episodes. Do you have a genuine reason to try and hide your assets (spouse), or are you just paranoid about the Patriot Act?

Episode 390
Episode 403
Episode 408


LiquidSilver - Thanks for the links. I'll follow up. I'm interested in this primarily to protect privacy and down the road ensure info about my assets remain private and not splash all over internet. On a recent job search, the company I was interested in performed an unusual background check (it was legal) and came back with my networth number that was within a few dollars (they were off by just less than 1/1000th of 1%) of the actual value of my overall familial networth. On one hand, it reduced my negotiating power since they had so much dirt on me. On the other hand, I was worried about the privacy risks if their practice becomes the norm.

I'm not worried about offshoring assets...mostly just trying to protect privacy.

Wow. How did they get access to your accounts, esp. retirement accounts?

TheWalL, one question do you own an iPhone of Android device? If yes then you have already blown all of your privacy. Deed records are the least of your worries.

scripta said:   Wow. How did they get access to your accounts, esp. retirement accounts?
I'm guessing one of the vendors along the way sold the data. Once you find one bit of info, its easy to trace the rest. My bet is that an old 401K management company sold the data as part of the firm getting liquidated. Companies like Acxiom, which buy such data, are getting fairly sophisticated in putting together models that can patch scrubbed/non-personal data with the trove of personal data they've collected over time.

nsdp said:   TheWalL, one question do you own an iPhone of Android device? If yes then you have already blown all of your privacy. Deed records are the least of your worries.

If by that you are talking about the tracking beacons, then there are hundreds of sites that will tell you how to get rid of those (and disable CarrierIQ). The point is, your deed records have every bit of your personal information attached that can be pulled out without so much as lifting a finger now.

I am very concerned about the lack of privacy practiced by public records web sites operated by various state and local governments. Whereas the original intent was to allow looking up ownership or interested party information attached to property, business, and projects, many are currently implemented in a way to allow reverse search from a name, if not directly, then through a private data aggregator. Also, I believe even making the property/business/project search available via Internet is simply too easy. I know property records are public records anyway, but having to visit the courthouse is an effective deterrent against those who are just fishing for information. My local government allows the online property information to be changed to "withheld by request", but the default is to display everything for everyone.



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