Deductibility of Golden Visa expenses for US tax purposes

Does anyone know if US citizens can write off any or all of the expenses procuring a Portuguese Golden Visa and/or real estate investment fund(s) necessary for the Golden Visa program? Can we also write off the travel expenses going to our biometric appointments? It seems like a long shot, but what the heck. My tax accountant asked me and suggested that I should ask people who are in the Golden Visa program. Thanks for your help.

Can’t imagine why you would be able to write it off. Maybe if you’re running a business? Or getting PT citizenship as part of your US based business?

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The same thought has crossed my mind but our CPA was very quick in letting us know that this will not be a possibility.

lol why should you getting residency in another country be the taxpayer’s problem?

Thanks for your feedback. In the US, I could write-off almost everything when I owned rental property in the US, but now, owning shares in two real estate funds in Portugal, I wasn’t sure. Another person in this chat said we couldn’t, so unless I get some yes responses, I’ll assume that we can’t. I am having no luck finding an accountant that is taking on new clients and has answers for me.

Thanks for your feedback. Has your CPA had much experience helping Golden VIsa applicants? I’m having a difficult time finding an available CPA that is knowledgeable, so any lead would be helpful. Thanks.

This should probably be a separate thread, but I would say if you could tie your travels to business expenses, you could write off some of them. Let’s say you own Portuguese rental property and think it’s a good idea to take a trip to visit at the same time as biometrics. Or perhaps meeting with your fund manager in person in Portugal on the same trip.

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Yes, lets all brainstorm ways to fudge taxes.

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This is a great discussion but I agree it should be a separate thread so it doesn’t get lost. @tkrunning , is that possible?

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There was a good thread a while back on PFICs and tax treatment for US citizens - I am assuming a mod would be willing to move the relevant posts over there.

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I’ve moved this discussion to its own thread now.

@ohbee I don’t see any issue with trying to understand whether there are legal deductions available.

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I am not an accountant but do have a pretty good understanding of how the US tax code works with respect to PFIC investments and investments in general. I think what Bradley is asking in his original post is whether any expenses incurred in getting the GV are tax-deductible (i.e. can be used to offset income), and in this respect my personal opinion is that they cannot, except perhaps for those who took loans to make their investment and have deductible investment interest.

What I think will probably work (and again this is in no way tax advice) is to track the investment-related expenses for the duration of your holding period, and add them to your cost basis as you go. In my opinion this would be things like initial setup commissions paid to the fund sponsor (but probably not annual fees or performance fees), fees paid to the bank that holds your funds, and any income that was not actually received but that you had to pay taxes on (seems fairly common based on the funds I’m in). In this way you are reducing your future capital gain liability when you go to sell your PFIC shares, but you can’t really get any benefits “as you go”. That’s my understanding of how the PFIC election works at the federal level, though it may vary depending on your state. It is intended to be a punitive tax regime for US investors, after all.

On the topic of whether PT trip and/or biometric appointment expenses are deductible, I’m sure some of the more aggressive accountants out there will sign off on that, but I for one would not like to be under the IRS microscope if I were audited and the auditor asked “were these expenses really required in making the investment, or were they personal in nature”. Basically, consider if you were an investor in the fund who wasn’t seeking a GV - would they incur these expenses as a necessary part of their investment, or are they basically particular to your case since you are also aiming for PR or Citizenship?

If you bought actual real estate in Portugal, it’s more possible that these things could fly. I’m not as clear on the rules for actively managed rental real estate but know they allow more than passive investments. Either way, for those who invested in funds I personally do not think anything other than standard-fare investment-related expenses will actually hold up in an audit.

Would be curious to know what more knowledgeable members of the forum would have to say on the matter, in particular @jb4422 who has had plenty of helpful input on US tax issues in the past, but I also know that there have been various US-tax related contributions from other users in this thread: PFIC For US Citizens

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This is merely my opinion. If you own investment real estate somewhere and need to travel there for the sole purpose of maintaining the real estate, then you can probably deduct some expenses. If there is any personal component to the trip, then I think the bar is really high to convince an auditor that this isn’t just a disguised vacation. When you add in property in Europe, I think the auditor is going to be on you like a dog on a bone. There is a point at which you are going to have to justify your expenses vis-a-vis your rental income, and in this situation I am not sure that will fly.

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Also my personal opinion but I think it would be hard to justify for funds but easier for real estate. But I really only see travel to Portugal to sign the deed as that’s done in person or attorney fees associated with their representation for deed signing and diligence.

Perhaps a small component to visit the property during the 7 days/year visit but certainly not write off the entire expense for the family to be there.

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What everyone else is saying.

IF you were a professional money manager, one could justify a travel expense as part of managing your money - visiting the fund office to have meetings, etc. The bar on that though is going to be very, very high (e.g. you are a registered investment advisor, etc).

Even if you are actively managing a property, or were a money manager, I cannot see any possible way you could justify the GV costs as a business expense. You don’t NEED to be a resident to manage your property or do investment research, and just because it’s convenient or helpful is not in and of itself a justification.

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If you pay a tax accountant for their advice, and their advice is “I don’t know if that’s deductible, ask the Internet forums” I would say it’s time for a new tax accountant.

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US taxpayer. I documented need to be in Portugal to open bank accounts and sign GV fund investment dox w/ face‐to‐face meets before 2021 law change w/ emails and memos of telcalls. Kept diary showing every day there focused on opening accounts and interviewing fund managers.
I’m adding to basis of investment all costs related to investment. Tho admitedly trivial $$ in big picture. Not adding GV related costs. So the costs of the initial sole purpose trip to Lisbon: flight/hotel/ taxi/ meal etc etc etc costs. Used nice but moderate rate Lisbon hotel not Algarve golf resort. Atty fees related to investment due diligence and agreement review. Translator costs… Lawyer costs associated with GV advice billed and paid separately.
Also moderate CPA charge to study PFIC issues and review partnership agreement.
Also will add trivial costs of trip from UK or EU to Lisbon for yearly meet w fund managers over expensive lunch (very small). Not costs for trip from US to UK/EU for 1 week stay or beach hotel costs.
Prob makes little dollar savings in long run as it will reduce LT Cap gain profit, if any, at the then LTCG tax rate. So save a few hundred in cash - maybe.
I got bigger worries in US and concerning Portugal than this.
Prob have tougher time w IRS w house/ apt investment, esp if I ever used it. Esp if ever started staying there often. Maybe OK if hotel partnership if cant buy a unit later.
In very unliky event ever DID get an IRS audit, much more worried about other issues thatbwould cost a lot of CPA time to document tho all legal its proving it in a TCMP audit. They won’t even see the gain on sale w stepped up basis till I’m dead at rate SEF is going anyway. Wife’s accountant’s problem then

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To be deductible, investment expenses must be necessary and ordinary. Yours are neither.

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I did not talk about deducting expenses. I specifically wrote “I’m adding to basis of investment all costs related to investment.” You shouldn’t post replies where you don’t understand the subject matter because you risk confusing nice, polite people who are looking for useful information. Here, you clearly do not understand the difference between “deducting expenses” and “adding to the basis” of an investment. So again, don’t speak on things you don’t know.

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Thank you for your response. You bring up some interesting points, I’ll bring up with the accountant.

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