A House of Cards: Can Wall Street Remain Bullish?

By: IS
Date posted: 01.18.2017 (5:00 am) | Write a Comment

January 2017 is proving to be a mixed bag for investors. Now that the New Year is well underway, some interesting trends are developing. For starters, the USD is struggling to maintain momentum against the JPY. The greenback was trading 0.3% lower against the JPY, at 115.64. Even the beleaguered EUR made some gains against the greenback as it rallied to $1.0626, before it dropped towards $1.0559. The heavily bearish GBP has also been gaining on the greenback, trading at $1.2167, from $1.2190 earlier.

The US dollar index is currently at 102.72, up 0.67%, or 0.68 points. The index has a 52-week high of 103.82. Simply put, this means that the US dollar is fractionally off its 52-week high, and well above its 52-week low of 91.92. The DXY measures the performance of the greenback against major global currencies including the JPY, EUR, GBP, CHF, CAD and the SEK. The most heavily weighted components of the DXY include the EUR at 57.6% and the JPY at 13.6%. The trading market cycles in January tend to reflect a rebalancing or repositioning of financial portfolios to accommodate the likely changes in the year ahead.

 

What’s Happening on Wall Street and Beyond?

Investors and traders are equally concerned about how high Wall Street markets can rally before correcting. Right now, we are seeing US stocks struggling to maintain their current levels. That the USD has come under fresh assault by leading currencies like the JPY and EUR is not to be taken lightly. Of course, a lot depends on what will happen once President-elect Trump is officially inaugurated on January 20, 2017. Traders remain highly bullish about a Trump presidency, and the massive fiscal stimulus that he has promised. Nonetheless, the mood of the moment is pensive. All major US indices are up, albeit modestly over the past 1 month. The Dow Jones Industrial Average has gained 0.88% and is now at 19,929.85, the S&P 500 index is up 0.55% at 2,272.05 and the NASDAQ composite index is up 2.06% at 5,556.80.

All major US indices have defied gravity, especially the Dow Jones which is moving ever-closer towards the critical 20,000 level. Across the pond, the all-share index in the UK – the FTSE 100 – racked up yet another consecutive day of gains. The FTSE 100 tends to perform strongly when the GBP is faltering. At last count, the FTSE 100 was at 7,310.32, up 5.12% over 1 month. The 1-year performance of the FTSE 100 index is extraordinary at +24.50%. The closest performing index is the DAX, with a 1-year return of 18.68%. For speculators, the 1-year performance of European bourses has been unprecedented. The Euro Stocks 50 PR has gained 9.57%, while the CAC 40 is up 13.77%

Factors Driving the USD Lower

Naturally, the positive performance of indices across the board is concerning. Any time an index rallies uncontrollably, the question has to be asked: Is this level fundamentally sound or is it driven by speculation? It is important to watch the performance of crude oil when trading equities. Brent crude oil reversed course and is now trading at $53.64 per barrel, after reaching $55.36 per barrel earlier on in the day. The reason oil prices are plummeting is news out of the latest US Baker Hughes Report that the rig count is increasing. As more WTI crude oil producers enter the fold, they undermine gains made by production cuts with OPEC members.

On Monday, 9 January, oil prices plunged 3.8%, raising concern that inflation expectations should be lowered. This had a negative effect on the USD which rallied on the back of its latest December jobs report. The USD is also being affected by inflation differentials in China. The PPI in China increased to 5.5% year-on-year, up from 3.3%, 2 months ago. This is being fueled by higher commodity prices (crude oil, natural gas, iron ore, copper etcetera) on a worldwide basis. Dollar-denominated commodities like iron ore, crude oil, and the like are negatively affected by a strong USD, and positively impacted by increased demand.

5 Trends to Watch After Trump Takes the Oath of Office

By: IS
Date posted: 01.17.2017 (2:42 pm) | Write a Comment

President-elect, Donald Trump will take the oath of office on January 20 and he’ll officially become the president of the United States. In the last few weeks of being the president –elect, his actions and inactions have been moving the markets. However, Trump’s ability to move the market will be amplified exponentially once he takes the oath of office.

The chief reason why president Trump will be a major market mover is that he is opinionated, blunt and he doesn’t have the career politician’s ability to sugarcoat words. If Trump doesn’t like your company, you can be sure to expect some damning tweets that could send your stock spiraling. Boeing already found out the hard way that Trump’s tweet could cause a stock to tank and Amazon’s Jeff Bezo is trying hard to get off Trump’s black book. This article provides insight into 5 trends investors must watch after Trump takes the oath of office.

Broad Equities could have a strong pullback

Equities have rallied strongly in the last nine weeks since Trump became the president-elect. The S&P 500 has gained 6.71% and the Dow Jones Industrials has gained 8.91% as seen in the chart above. The main reason behind the gains in equities is that Wall Street is speculating that Trump’s economic policies such as tax reductions could provide a boost for U.S firms. However, if Trump is unable to effect his proposed economic policies, stocks could give back most of those recent gains in an abrupt pullback.

Healthcare stocks could suffer bigger losses

Trump has been vocal about his plan to repeal the Affordable Care Act (also known as Obamacare). Opinion is divided on how dismantling Obamacare could affect the average American and it is hard to separate the fact from the sensational noise.  However, we do know that Trump thinks that pharmaceutical companies are enjoying oversized margins and he’ll push for regulation to reduce the price of drugs. More so, we can submit that repealing obamacare could have a negative effect on the stocks of healthcare and insurance companies at least in the short term.

Construction and Defense Stocks might fare better

Trump has also been vocal about his plan to adopt a tougher stance on immigration, chief of which is building a wall along the U.S.-Mexico border. If Donald Trump continues along the usual lines of riling Mexico, we can reasonably expect the stocks of construction firms to see as boost with the expectation of increased government infrastructural spending in building a wall.

The outlook in emerging Economies will remain gloomy

Investors with exposure to emerging market economies such as Turkey and Mexico can expect to see a weakening in emerging market currencies against the USD in the forex market. The Mexican Peso is already down to all-time lows against the Dollar. We won’t see the end of the decline in the Mexican Peso until Trump makes a final decision on whether or not to build the wall. The Turkish Lira is also down to historical lows against the dollar as macroeconomic concerns continue to make investors uneasy.

The Economy might suffer more risk-off trade

Donald Trump is also very vocal about his distaste for China. He has accused China of manipulating the Yuan in order to undermine the U.S. economy. He has also taken issue with the migration of many American manufacturing jobs to China. However, Trump’s outbursts against China could lead to more risk-off trade in Asia because China is not the only country “stealing” America’s manufacturing jobs.

Nobody knows the specifics of Trump’s foreign policy and it would be interesting to see how he handles China. Nonetheless, investors with exposure to American firms who making or selling their products to China might want to prepare for increased uncertainty going forward.

Final words…

It is hard to predict how the market will react under Trump because Wall Street has defied expectations at practically every turn by going against analysts’ consensus expectations. For instance, Trump’s victory in the election didn’t lead to a stock market crash as analysts had predicted. The performance of the financial markets in the next couple of weeks will provide clues on some trends to watch when Trump officially becomes POTUS.

 

 

Top Assets to Trade in Binary Options Format

By: IS
Date posted: 01.10.2017 (2:39 pm) | Write a Comment

 

2017 has arrived, and already investors are reorganizing their financial portfolios to hedge against possible shocks. Several major geopolitical events occurred in 2016, including the Chinese stock market meltdown in January, the Brexit vote in June, and the surprise victory of Donald Trump in November. These critical events reshaped the financial markets. For example, day traders were able to capitalize on the collapse of the Shenzhen composite index and the Shanghai composite index, by shorting Chinese stocks on Wall Street, the LSE and other European bourses.

 

Currency traders cashed in on the melee by shorting the CNY against other top-performing G10 currencies. Within weeks, it became apparent that the Chinese economic growth engine was stuttering. Commodities imports to China were drying up an inventory levels were rising. This had an immediate effect on copper demand, iron ore, and other metals. Countries like Australia, South Africa, Brazil, Russia, and India all suffered the fallout from the slowdown in China.

Understanding geopolitical events and trading binary options

The Brexit referendum on June 23, 2016 sent shockwaves through the global community. Nobody expected Britons to vote 52%/48% in favour of a break from the European Union. Net short positions on the GBP were evident with binary trading UK brokerages. The GBP went into freefall, from 1.48 to the greenback down to 1.21. The GBP/USD pair plunged to a 31-year low within short order. Traders cashed in on GBP weakness by shorting the currency against the USD, JPY, EUR, and CAD. For the most part, these speculative assessments of the GBP proved correct. That the FTSE 100 index has been able to rally in the aftermath of the Brexit referendum is notable. However, the reasons for the rally are found in the weakness of the GBP. Analysts calculated that the double-digit percent gain for the FTSE 100 index is only a low single digit gain when valued in USD, not GBP.

 

In other words, the bubble effect that we are seeing taking place on the FTSE 100 index is not a true reflection of the performance of the UK economy. It is a result of the currency cross exchange rates. 75% of companies listed on the FTSE 100 index are based outside of the UK. This means that their repatriated earnings are worth more in GBP, with currency cross exchange rates. For traders, the choice is clear: go long on the FTSE 100 index as long as Brexit uncertainty places pressure on the GBP. The fundamentals of the UK economy appear to be sound, especially manufacturing, and this is going to help mitigate any negative effects on the GBP for the short-term. However, if financial companies start relocating from the City of London to Europe, the GBP will falter and manufacturing will fall below the key 50 level (50+ represents growth and 50 – represents contraction).

 

The Trump effect on trading

Donald Trump is a polarizing figure, but he is the President-elect of the United States of America. His shock victory on November 8, 2016 sent Wall Street markets into the stratosphere. His economic policies include massive fiscal stimulus for infrastructure development. Trump has promised to repeal and replace Obamacare, rebuild the American military, rebuild infrastructure, and restore American pride.

He plans to spend hundreds of billions of dollars to do this, and generate hundreds of thousands of jobs in the process. Trump is seen as pro-business, with his tax cut policies (15% or 20% for corporate taxes) and his anti-regulation approach to the corporate sector. The Dow Jones is trading close to 20,000, the S&P 500 index is rallying, as is the NASDAQ composite index. As long as Wall Street indices are in the black, safe haven commodities like gold are no go options for investors.

However, binary options traders are cashing in on gold price weakness with put options on the precious metal. Gold prospers when a risk-off approach is adopted to equities markets, or when geopolitical shocks rock economy. 2017 presents multiple opportunities to profit big the state to the financial markets. The USD, Dow Jones, and FTSE 100 are clearly bullish, while the GBP, EUR and ZAR are on the bearish side.

2 New Trades ($MSFT, $TZOO, $TRIP, $YELP)

By: ispeculatornew
Date posted: 01.04.2017 (3:00 am) | Write a Comment

Today I am opening my trades #3 and #4. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaEarningsMkt CapRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
EBAYeBay Inc29.6918.8514.389.1-2.253.516.111/25/2017$33,520,000,000.007.11-2.480.74
GOOGAlphabet Inc771.82N/A18.943.1513.624.8N/A1.211/26/2017$546,000,000,000.00#VALUE!18.7314.78
FBFacebook Inc115.0544.9222.0911.1743.824.6418.781.041/25/2017$336,200,000,000.006.449.44#VALUE!
PYPLPayPal Holdings Inc39.4735.0223.0310.3915.244.1511.77N/A1/25/2017$48,220,000,000.007.57#VALUE!#VALUE!

And the usual chart that I like to bring up:

In many ways, this is a bet on a reversal of what happened last year:

 

Long Microsoft (MSFT) & Short Travelzoo (TZOO)

Microsoft has been on quite a tear. Despite significant competition, it has been able to turn around many of its businesses, make smart acquisitions (LNKD) and also build solid cloud-based businesses. I’m a strong believer in what the company has been pulling off. On the other side is TZOO, a company that has been performing at a high level and that was a difficult one to short in 2016. I do think that will come back to earth at some point this year and am willing to get back on this short. I will of course be following this one closely but TZOO mostly depends on email marketing which is a solid business and I think the company has been optimising it carefully but there’s a limit to how much that can be done as it will need to be adding a lot more subscribers and thus driving a lot more new users. That is something I’m not seeing right now making me skeptical of its current valuation.

Long TripAdvisor (TRIP) & Short Yelp (YELP)

I did consider for quite some time going long TRIP vs a short on TWTR and as I’ll soon be writing about, I’m very skeptical of Twitter’s ability to turn things around. That being said, shorting TWTR carries a decent amount of risk (takeover, turnaround, news, etc) and for now I’m judging that YELP is a better short. These are two competing products in many ways but I believe TRIP is growing much faster. The big problem of course is TRIP’s inability to convert those numbers into growth in its financials. Last year was painful as a TRIP longer term owner but I do think TRIP offers much better value and that will be reflected over time. Look at a chart from Google trends that gives insight into their traffic evolution:

Disclaimer: Prior to opening this trade, I have a long position on $TRIP
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2 New Trades ($GOOG, $EBAY, $FB, $PYPL)

By: ispeculatornew
Date posted: 01.03.2017 (3:00 am) | Write a Comment

Today I am opening my first 2 trades of the year As you can imagine, it will be nice to start from scratch following a not great year of long & short trading in 2016!! As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaEarningsMkt CapRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
EBAYeBay Inc29.6918.8514.389.1-2.253.516.111/25/2017$33,520,000,000.007.11-2.480.74
GOOGAlphabet Inc771.82N/A18.943.1513.624.8N/A1.211/26/2017$546,000,000,000.00#VALUE!18.7314.78
FBFacebook Inc115.0544.9222.0911.1743.824.6418.781.041/25/2017$336,200,000,000.006.449.44#VALUE!
PYPLPayPal Holdings Inc39.4735.0223.0310.3915.244.1511.77N/A1/25/2017$48,220,000,000.007.57#VALUE!#VALUE!

And the usual chart that I like to bring up:

 

Long Alphabet (GOOG) & Short eBay (EBAY)

I think it’s fair to say that times have changed at Google.. uhm.. I mean Alphabet. The company has doubled down on getting its spending under control and I think that was a smart and necessary move. Moonshots make sense and will remain part of Google’s core. I don’t think there are any doubts that some of them, including AI, self-driving, etc will end up having significant commercial applications and I am a believer in those segments of the company. But having no restrictions on the spending makes very little sense in my opinion and the cost-cutting that is happening will bring important benefits to the company. On the other side, I remain highly skeptical of ebay’s place in the online shopping marketplace in a world where Amazon’s dominance continues to increase month after month in almost every measurable way.

Long Facebook (FB) & Short Paypal (PYPL)

Facebook and Paypal are two clearly different companies and while you probably know that I have a deep level of admiration for Facebook’s execution, I also think Paypal is very well positioned and much more difficult to displace than believed by most. That being said, I do think PYPL’s valuation is very difficult to justify when I compare to how much growth Facebook is able to achieve. Yes, both are likely in declining growth periods but I do remain optimistic about Facebook’s position.

Disclaimer: Prior to opening this trade, I have a long position on $FB

Closing Last Trade of 2016 (GOOG, EBAY)

By: ispeculatornew
Date posted: 01.02.2017 (3:00 am) | Write a Comment

As you can imagine, I’m not too upset about closing the door on 2016 long & short trading. I will be starting off fresh in the coming days but tomorrow morning when the market re-opens, I will be closing off the final trade of the year, which is slightly up:

Long Alphabet (GOOG) & Short eBAY (EBAY)

 

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How tax optimisation can maximise the returns on your investment property

By: IS
Date posted: 12.20.2016 (5:00 am) | Write a Comment

This article has been writen by George Kachmazov, managing partner of Tranio.com

 

If you’re not careful, taxes can eat away at the bulk of the income you should be earning on your foreign investment properties.

This fact alone sends chills down the spines of property investors everywhere. A recent survey conducted by Tranio.com revealed that 18% of property investors believe structuring purchases for maximum tax optimisation is the single most difficult part of acquiring real estate abroad.

To further complicate matters, more than 100 countries have committed to the Common Reporting Standard (CRS), an initiative developed by the Organization for Economic Co-operation and Development (OECD).

In accordance with the CRS, between 2017 and 2018 countries around the globe will launch the automatic exchange of financial account information, dispelling the opacity that previously enabled wealthy citizens to squirrel their money away into foreign bank accounts in order to dodge tax obligations in their home countries.

In light of the shifting realities of tax optimisation, I want to offer you some advice on how to acquire foreign properties with tax optimisation in mind. Please note that this is general advice. I strongly encourage you to consult a tax advisor who is familiar with the nuances of your situation before you purchase any property.

 

Pros and cons of purchasing a property as an individual vs. via a legal entity

 

If tax optimisation is a key priority, you would do well to begin by determining whether it would be wisest to purchase your property as an individual or via a legal entity.

Because tax rates and terms differ considerably between these two categories, your choice in this matter will have a key impact on your total tax obligations in connection with the property.

The table below outlines some of the basic differences:

 

  Individual Legal entity
Advantages — No need to pay the costs associated with maintaining a company;

— Capital gains taxes can be lower for individuals than for legal entities (some countries provide capital gains tax exemptions after a few years of property ownership)

— If the property generates significant profits, tax rates may be lower for legal entities than for individuals;

—  The possibility of exemption from capital gains and dividend taxation if the rules of strategic participation apply;

—  In some countries, i.e. Germany and France, no inheritance tax applies to property acquisitions by a company;

—  Increased flexibility with respect to selling shares or the property itself;

—  Greater protection against the disclosure of information.

Disadvantages — Income tax can be higher for individuals than for legal entities;

— No flexibility with respect to withdrawing from the sale

— It is impossible to conceal the identity of the beneficiary.

— There are costs associated with running a company;

—  In some countries, i.e. the United Kingdom and France, specific property taxes apply to legal entities.

 

 

* Please note that the information contained in the table above is subject to variation depending on which country you’re purchasing property in and a wide range of other factors. It’s always important to consider your unique circumstances and consult with relevant professionals before making any purchase.

When our clients are considering purchasing a property valued at about EUR 1.25 million or less, we generally recommend that they make the purchase in their individual capacities. It is typically cheaper and easier to do so due to the additional expenses associated with opening and maintaining a company.

However, this isn’t universally true; in some countries, individuals are subject to higher income tax rates than legal entities, which can offset any advantage of purchasing as an individual. This tends to hold truer the higher the individual’s income.

If the property is worth upwards of about EUR 1.25 million, it is typically advantageous to make the purchase via a legal entity. In this case, lower income tax rates and greater opportunities for tax optimisation tend to offset the company-related costs.

This is largely attributable to the fact that a relatively expensive property would usher in relatively high income, which in many countries would expose an individual owner to higher tax rates than it would a legal entity.

Consider, for example, a property in Germany that generates rental income of more than EUR 50,000 per year. An individual owner would pay some 40% in taxes, while a company would pay a comparatively meager 15%.

Generally, such savings would fully offset the cost of launching and maintaining a company. However, this holds primarily true in cases where the company and its owner are both tax residents of the same country. Otherwise, dividend taxes would negate any tax benefits derived from purchasing a company as a legal entity.

What taxes do legal entities usually need to pay for properties?

 

If a legal entity owns income-generating real estate overseas, it will typically be subject to the following types of taxes:

  • Taxes on any income generated by the property (rental income, capital gains from the sale of the property or the sale of a portion of the legal entity or its shares)
  • Property tax (usually compensated by tenants)
  • Land tax
  • Inheritance tax, if applicable (exemptions often apply)
  • Tax on dividends (exemptions typically apply if the investor refrains from distributing dividends and instead reinvests the funds in the same country, for example into another property).

 

Tax rates for individuals and legal entities in the United Kingdom, Germany and France

Data: Tranio

  Income tax/profit Capital gains tax Estate tax Property tax
United Kingdom Individuals 20-45%

 

20-28% (not applicable to the sale of a primary place of residence) 40% (this does not apply between spouses) Not applicable*
Legal entities 20 % 20 % Not applicable From GBP 3,500 for properties valued at more than GBP 500,000*
Germany Individuals 14-47.47 % 14–47,47 % (not applicable after 10 years of ownership ) Up to 50 % Not applicable *
Legal entities 15.825 % 15,825% (not applicable if the owner invests in another German property within four years of the sale)

 

Not applicable under certain circumstances** Not applicable *
France Individuals 20-45% 20-45 % (Not applicable after 22 years of ownership) 5-60 % (this does not apply between spouses) Not applicable *
Legal entities 33.33% 33.33 % (not applicable after 22 years of ownership) Not applicable upon registration with a Société Civile Immobilière

(SCI)

3 %*

* There are property taxes, but it’s the tenants responsibility to pay them.

** The business must operate for a minimum period of seven years after the acquisition of the property, and total salary expenditures must exceed the original salary expenditures by more than eight times, or the number of employees must exceed 20.

  

Taxes on rental income

 

 Rental income tax is included in the corporate tax rate and is payable in the tax jurisdiction where the property is located. As a general rule, if a company is liable for taxes in a foreign jurisdiction, and a double taxation treaty applies between the company’s home jurisdiction and their foreign jurisdiction, the amount of taxes paid overseas is to be subtracted from the amount of taxes that is supposed to be paid home. The difference should be paid in the home jurisdiction. If the tax overseas is bigger, then there will be no taxes home.

In order to reduce your income tax base, you will need to scour the tax regulations for deductible expenses that apply to your purchase, ownership and maintenance of the property. Such deductions may include:

 

  • The cost of acquiring a founder loan;
  • The cost of acquiring a bank loan;
  • Building depreciation;
  • Leasehold improvements;
  • Transaction execution expenses;
  • Property tax;
  • Property management and maintenance expenses;
  • Other expenses during the ownership period.

Taken together, the aforementioned deductions can significantly reduce a property owner’s income tax base during the first decade of ownership. The table below outlines a typical German example.

Sample calculations for legal entities in Germany, Euro

Data: Tranio

 

  Standard tax scheme         Effective tax scheme
Tax base calculation
Property price 500,000
Annual rental income 30,000
Building depreciation deduction (2 %) 10,000 10,000
Deduction of mortgage interest
(LTV 50%, 2% per annum)
5,000
Deduction of founder loan interest (LTV 50%, 4%
per annum)*
10,000
Tax base 20,000 5,000
Tax calculation
Corporate tax (15 %) 3,000 750
Solidarity surcharge (0.825 %) 165 082.50
Total tax sum 3,165 832.50
Annual income after taxes 26,835 32,417.50
Percentage of annual rental income that taxes account for under both schemes 10.55 2.5

* The interest rate on the founder’s loan can be increased, thus reducing the effective income tax rate to zero

 

A founder loan could enable you to save part of your income from dividend taxes.

Founder loan interest is subject to the investor’s personal tax obligations in the country of his or her tax residency. But the investor must also be ready to pay founder loan taxes in the country where that interest was generated.

 

Capital gains and asset transfer tax

 

Whether you will be obligated to pay capital gains tax or asset transfer tax depends on the ownership structure at the moment of the sale. This can occur either when you sell the property itself (asset deal), or when you sell the company that you purchased the company through (share deal).

In the case of an asset deal, capital gains tax is typically calculated as the difference between the sale price and the carrying amount of the property. The carrying amount is the cost of the property, less accumulated depreciation. While depreciation decreases the carrying amount, it increases the capital gains tax base.

Let’s say, for example, you purchased a property for EUR 1 million and sold it for EUR 1.1 million. You owned the property for three years, during which you had a 2% depreciation allowance, amounting to EUR 60,000 over the course of your ownership. Your carrying amount is thus EUR 940,000. Your capital gains tax base will amount to EUR 160,000 – the difference between the sale price and the carrying amount.

In the case of a share deal, the property’s carrying value is of no importance for tax purposes. In this case, profits from the sale of shares are taken into account to calculate asset transfer taxes.

Say, for example, you purchased a company in order to purchase a EUR 1 million property. You then sold the company for EUR 1.1 million. Thus the tax base for asset transfer tax is calculated by deleting the purchase price from the sale price, so in this case your tax base would be EUR 100,000.

In the context of the above examples, it would make more sense financially to purchase the property through a company; doing so would save you EUR 60,000. Investors who already have an exit strategy in mind when purchasing a property – such as those who plan to purchase a property, flip it, and sell it at a profit five years down the road – typically favor this model.

While it’s possible to structure real estate purchases in such a way as to ensure you’ll be exempt from capital gains tax, it’s not easy. Doing so requires extensive research of and familiarity with local legislation in the country that you’re planning to purchase in. It will also likely require corporate ownership and elaborate deal structuring, which is best left to seasoned professionals.

 

Double taxation laws

 

Another key issue that can have a considerable impact on capital gains tax is the existence of double taxation laws or relevant treaties between the county where the real estate is located and the country where you registered your company. Double taxation regulations can protect taxpayers from paying the same tax twice.

For some practical examples of this, we spoke to Dmitry Zapol, an international tax advisor at London-based tax practice IFS Consultants. Mr. Zapol explained that UK residents are required to pay income tax on foreign source rental income at their marginal rate. In other words, foreign rental income is added to the UK resident’s other types of income, and the total amount received during the tax year determines the applicable income tax rate.

However, UK law protects taxpayers from double taxation even in the absence of a double tax treaty.

“If foreign rental income suffers withholding tax [in the source country], it is credited towards UK tax liability in order to avoid double taxation. In order to calculate the tax credit, the taxpayer calculates the actual amount of tax paid abroad and sets it off against UK tax liability,” said Mr. Zapol. “In the end, this results either in having to pay the difference between the two amounts (if UK tax is higher) or brings no further tax liability (if UK tax is smaller), although in the latter case the difference will not be refunded. In calculating the tax liability, it is necessary to take into account the difference between UK and foreign tax years, which usually do not run concurrently.”

He added: “Normally, the relief is offered under a double taxation agreement concluded by the UK. However, unlike in some countries like Russia, the relief is also available in the absence of the agreement… Normally, the UK resident must submit proof that tax was withheld outside the UK to be able to credit it against his UK tax liability.”

Generally, the ways in which you can benefit from double taxation laws or agreements hinge on whether you purchased the property via a company or as an individual. In order to determine which taxes you’ll be on the hook for in your home country, you will need to familiarise yourself with the ins and outs of the relevant policies.

Mr. Zapol noted that the relevant UK laws are complex. “Broadly, if a UK tax payer buys a foreign company that receives foreign rental income, he must declare its income as if it were his own and pay tax on it or alternatively declare dividends and also suffer tax liability. Interestingly though, if he receives the same company as a true gift from someone else, there is no tax liability until a distribution is made. Also, if the person is domiciled outside the UK, he can claim the remittance basis and stay outside the scope of the transfer of assets abroad rules,” said Mr. Zapol.

Prior to any purchase, I recommend that you consult a tax specialist.  Should you have any questions, Tranio will always be happy to help. We can provide you with a comprehensive overview of the tax and legal issues that will apply to your purchase of any overseas property, and help you achieve the optimal transaction structure.

 

George Kachmazov, Tranio.com managing partner

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Closing Trades

By: ispeculatornew
Date posted: 12.15.2016 (6:31 am) | Write a Comment

Wow, you would not tell from my long & short tech stocks but this has actually been a very good year in terms of investing performance for me. That is because most of my income is invested in fairly passive ETF’s. That being said, today is another day where I’m closing some long & short tech trades that unfortunately didn’t turn out very well.

This morning I will be closing 4 of the remaining 5 live trades which are all at -20 or worse:

Long Expedia (EXPE) & Short Microsoft (MSFT)
Long Paypal (PYPL) & Short IAC Interactive (IAC)
Long Salesforce (CRM) & Short Zillow (Z)
Long Tripadvisor (TRIP) & Short Twitter (TWTR)

As is always the case, you can see all the long and short trades from 2017 (and previous years) here:

http://www.intelligentspeculator.net/livetrades

Over the next few weeks I will be writing a bit about what I think went wrong this year and hopefully on the long & short stock picks, I can turn things around in 2017!

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The Ultimate Museum Adventure in San Francisco with Museum Hack

By: IS
Date posted: 12.13.2016 (3:44 pm) | Write a Comment

Choosing just one fun, energetic and exciting adventure in San Francisco can be a tricky task. With so many unique experiences to choose from, how do you find the perfect one? Well, if you crave adventure and love juicy gossip and interesting stories, a Museum Hack tour is the perfect fit.

Museum Hack leads museum adventures in some of most amazing museums on Earth. Their tours are designed to be high energy and fun, perfect for helping people see museums in a totally new light. Complete with selfies with the art, games and juicy historical gossip, this is the most fun you’ll ever have in a museum.

Museum Hack hosts their renegades tours at the de Young in San Francisco, as well as in New York City, Chicago and Washington D.C. The de Young is home to some seriously eccentric collections (thanks to its namesake Michael de Young’s personal collection) but also includes everything from American Art to Textile arts.

Take a Museum Hack Tour of the de Young

Un-Highlights Tour: The de Young is the ideal location for a tour intent on finding the secrets and juicy gossips behind art and artists. The Un-Highlights Tour focuses on the kind of stuff you may not normally see on a museum tour.  It’s super high energy with a 100% satisfaction guarantee, and all the sass and wit of the Museum Hack brand.

Badass Bitches Tour: Female artists are criminally underrepresented in museums, so Museum Hack created a tour to celebrate female artists and female subjects. This fast-paced museum experience focuses on badass women in history. This tour will leave you ready to take on the world. It’s perfect for people of all genders!

Beta Tours: The“beta test” of the museum adventure world. Beta Tours are created to mint new guides and test out brand new tour ideas.  The most recent Beta Tour at the de Young was murder mystery themed, where guests had to solve clues and find the killer before they had the chance to strike again.

VIP Tour: The ultimate museum experience. Perfect for dates of all kinds, the VIP Tour includes wine! This premiere de Young experience will have you learning the secrets of all the hidden nooks and crannies of one of the greatest museums on earth.

Highlights of a Museum Hack Tour in San Francisco

  • Juicy stories about artists and art that aren’t often highlighted on traditional museum tours
  • Your tour guides will be passionate and energetic. They LOVE museums!
  • Never a dull moment
  • Selfies (with the art!)

Museum Hack has also figured out how to transform their museum adventures into seriously awesome company team building experiences.  These custom team building tours are designed to help get staff motivated and excited, and to boost morale.  This is the kind of activity your staff will LOVE so much they’ll forget they are team building!  And you know what the coolest part is? Team building tours can be customized to fit your company values, goals, and history.

If you don’t love art or museums, don’t worry. The Museum Hack design keeps the  non-museum-lover in mind, so they are a good fit for anyone. Whether you are a visitor to San Francisco looking for a fun and unique experience or a local seeking something new, Museum Hack is the perfect place to start.

 

 

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Updating The Stocks I Follow

By: ispeculatornew
Date posted: 12.01.2016 (7:01 am) | Write a Comment

twilio_logo_01Today I’m (finally!) updating the list of stocks that I follow. There have been a few different changes so today I’ll discuss stocks that I’m removing, adding and ones that will be added in the near future if all goes well.

Youku Tudou Inc (YOKU) was taken over by Alibaba (BABA) earlier this year which in a way was not a big issue because I’ve mostly stayed away from trading Chinese tech stocks but I did like the idea of being able to eventually trade a pure video play.

Monster Worldwide (MWW) was acquired by Randstad Holding. MWW was a stock I had consistently shorted as I see it mostly as a company that failed to adapt to a changing internet and will continue to struggle with the likes of LinkedIn and even

Rackspace Hosting (RAX) was acquired by a group led by Apollo Global Management LLC and Searchlight Capital Partners UK LLP. It was a stock that I had shorted despite being a very interesting company but remained overvalued in my opinion.

Demand Media (DMD) was acquired by Leaf Group Ltd, it was a stock I had mostly stayed away from because of the challenge in trying to value it. DMD owns a lot of different sites such as eHow.com which probably are seeing a slow steady traffic decline and I doubt that will change. It was a bit of an IAC Interactive (IAC) style of company but with less growth and not as much in terms of interesting divisions.

Stocks That I’m Adding:

Twilio Inc (TWLO): Twilio is a company that went public this summer and that I would not be trading right now because I want to better understand its business. the company develops and publishes internet infrastructure solutions that allow web developers to integrate phone calls, IP calls, text messages and more. Its customers include Uber, Airbnb, Netflix (NFLX), Coca-Cola (KO), Salesforce (CRM) and more. Not a bad list right? The other reason why I’m waiting is that I try to wait a few quarters of earnings, calls, etc to better judge a company. That is probably even more important when discussing a company that has fast-growing revenues but is losing money. If you look at these charts of revenues and EPS you will see exactly what I mean:

twlo_chart

twlo_chart-1

Trivago (TRVO): Trivago will be a newly listed company, that is being “spun out” of Expedia that will be added to the stocks I follow as soon as it launches.

Snapchat Inc (SNAP): Snapchat will be the most fascinating tech IPO (it filed a confidential IPO) in a long time and I’m very much looking forward to the stock listing. Why? So many reasons:

-A Pure “Social” play that can be compared with Facebook, Twitter, etc

-I’d love to see revenues and EPS be “disappointing”. increasing opportunities for profit

-The company has been executing tremendously well on a longer term strategy

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