US San Francisco

Hi folks,

Just wondering if anyone on here holds or has held IP's in San Fran Bay Area (city and suburbs)?

If so, could you please inbox me?

Thanks so much!

 

I wish! Some stunning homes there–I was droling last November when I was in town.

 

I've been following the mayoral election. Interesting things happening - A Yes In My Back Yard, pro development, pro social housing but overwhelming left wing candidate is running and some of the policies are very interesting from a planning perspective

http://www.citylab.com/politics/201...t-big-single-issue-political-platform/386117/

 

Not a place I'd like to be a renter - more expensive than Manhattan.

 

It is a beautiful city. Some context: I'll be there in January for work for a couple of weeks, and though the AUD is weak and SF property expensive, I thought I'd use the time to investigste anyway.

As others mentioned, the rents are sky-high, as are buy-in prices.

Though SF is pro-development, I believe that the natural boundaries of national park + water PLUS the added dynamic of the earthquake-proof architectural requirements in place, will continue to see this city have demand far outstrip supply, even as more unit blocks squeeze (literally) into a very cramped place!

 

I will be there in Dec and Jan for leisure. Maybe have a look.

 

Take plenty of warm clothes.

 

Thanks. We'll be skiing in Lake Tahoe during Christmas week. Yay!

 

Man; that will be awesome!!

We were there in April the year we came back, and there was tons of snow, and looong runs.

 

I was in Tahoe last year... had a blast.

My Mrs is from San Fran and we are looking at relocating there next year. I've been looking around and yeilds are good but the prices are generally high (especially with weaker dollar). East Bay seems to be the area to go for.

I also found that finance is very different due to the sub prime crisis... IO is generally harder to service and much lower LVRs.

Would be interested in hearing your thoughts once you are there.

 

Hopefully I can do a short report during my stay there at friends in Palo alto.

 

second this
I went in June a Few years back and it was freezing then.

 

Yup it gets pretty chilly! And the wind is so gusty!

@myhillyg seeing as your other half is from there, you might know... assuming a loan there would need to be P & I (not IO), this means that over over say a 10-15 year hold, a substantial principal will have been paid off. This means that capital gain will also be substantail.. what is CGT like in the USA?

And, would the CGT be smarter to be paid in the US? Or is it bstter to sell the asset there, but declare the capital gain and CGT payme t here in Aus?

Can't imagine America's good old IRS would be too pleased about CGT dollars NOT being paid there, but instead being paid here!!

 

Just read this article about a google employee living in a truck because rental in Bay area is too much for him. http://business.asiaone.com/property/news/high-rental-costs-so-google-employee-turns-truck-home

 

Maybe @MTR can help. She has US property in Atlanta from which she has done well. Not sure if she has anywhere else in US. I seem to remember San Fran mentioned somewhere in her posts. Maybe she can shed some light?

 

No properties in SF unfortunately, and I don't know any investors on SS/PC who purchased in this area because they would not be cash flow positive from day 1, cost of houses even foreclosures would be much higher entry level. Love SF

In the main investors were buying in Atlanta, Arizona, Florida, Texas, LV, as mentioned purely cash flow play with entry levels starting at around $35,000.

MTR

 

Yes. It gets complicated, I'm not totally across the details but can say the following.

- P&I shouldn't affect the CGT calcs
- You won't be able to choose where to pay the tax. IRS will get their pound of flesh. If resident in AU, ATO will get whatever is left over via the dual tax agreements.
- You will pay state (6% to 13%) and federal (15% to 20%) CGT in the US - so probably around 25%
- Same goes for income

As usual seek proper advice about holding US assets. If you are resident they will want a worldwide slice of income. If you are a citizen they will want it whether you're resident or not!

 

Its absolutely critical to get advice from USA accountant and don't trust any accountant in Australia who states they understand US tax laws, its very complicated and if they get it wrong you will be wearing it.

I have 3 LLC (Limited Liability Companies) set up in US, income on both county and federal (IRS) is paid at much lower rate than in Australia, anything I pay is credited back in Australia. My Australian accountant works with my US accountant each year to work out the best scenario.

As far as CGT is concerned in US my US accountant advised that you pay between 0 and no greater than 15% CGT in USA.

If you want a gun US accountant send me a message and I will pass on details.

What I have found in US in terms of IRS and paying tax is that if you get it wrong etc you will be up for large penalties. The first year was horrific because I had the wrong accountant in Australia, I ended up with a $10,000 penalty, of course it got cancelled, however imagine opening a letter requesting this.

MTR

 

Great advice for anyone thinking of investing in USA. Thanks for info MTR.
We often talk about investing in different states and how the laws differ. I can only imagine the vast differences in another country. It's vital to have the right team in the right jurisdiction for the best result and minimal headaches.

 

Looks like you might not be seeing JH while you're over there.