Are you tempted to invest in real estate since the land prices seem to only go upward? If you decide to be a landlord, make sure you declare your rental income. The Israel Tax Authority is increasing its efforts to clamp down on tax evasion among landlords, using artificial intelligence to cross-reference records from the Land Registry to find unreported rental revenues.
According to a recent article in Globes, this initiative sets the stage for a forthcoming voluntary disclosure program, offering landlords a chance to rectify undeclared income without facing criminal charges.
Is it easier to invest in real estate or stocks?
Many investors have the (sometimes false) impression that owning apartments will always provide steady rental income. However, investing in the stock and bond market may provide similar returns without the additional headaches of property management. Investing in securities may provide a more streamlined process for reporting profits. Typically, all information for U.S. and Israeli tax filings is neatly summarized on a 1099 form. This simplicity contrasts with the challenges of managing rental contracts, and declaring income to one or more countries.
Can’t renew your U.S. passport??!!
I recently fielded a call from a woman who reached out to me in sheer panic. Since the early ‘90s, when she moved to Israel, she had neglected to file her American taxes, and now, upon attempting to renew her U.S. passport, she was denied a new passport. She was unable to renew her American passport because she wasn’t compliant with her American tax reporting. Now, she must deal with the bureaucracy of late reporting, possible fines, and address criminal implications, all to renew her passport.
Since my expertise is managing American investment portfolios for dual citizens living in Israel, I urge all olim to make sure they are compliant with all tax reporting obligations. My clients receive a 1099 which should be given to both their Israeli and American accountants. To help both clients and their accountants understand some important nuances of reading the 1099s and December statements, I made a brief video, which you can watch by clicking here.
If you would prefer the simplicity of investing in an American brokerage account as opposed to being a landlord, call 02-624-2788 to see how we can help.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.Profile-Financial.com He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published June 25, 2024.