Buying, Renting, Managing and Selling US Real EstateMatthew Ledvina
Before a foreign investor invests in US real estate, he or she should consider the issue of who/ what person is reflected as the purchaser and owner of that property. In other words, should such person be the foreign investor or a corporation, a partnership, or a trust in which he or she has an ownership or beneficial interest?
Tax Guide to Overseas Real Estate Investments for U.S. InvestorsDurise
Before you even begin to consider a jump into the foreign real estate investment pool, it’s important to become as knowledgeable about the entire process as possible. One item that is particularly important to research and understand is the tax implications that go along with property investing overseas. To that end, we’ve put together this tax guide to help U.S. real estate investors gather some much needed tax information.
Buying, Renting, Managing and Selling US Real EstateMatthew Ledvina
Before a foreign investor invests in US real estate, he or she should consider the issue of who/ what person is reflected as the purchaser and owner of that property. In other words, should such person be the foreign investor or a corporation, a partnership, or a trust in which he or she has an ownership or beneficial interest?
Tax Guide to Overseas Real Estate Investments for U.S. InvestorsDurise
Before you even begin to consider a jump into the foreign real estate investment pool, it’s important to become as knowledgeable about the entire process as possible. One item that is particularly important to research and understand is the tax implications that go along with property investing overseas. To that end, we’ve put together this tax guide to help U.S. real estate investors gather some much needed tax information.
Reporting Requirements for US Citizens with Foreign Assetsgppcpa
The presentation reviews the reporting requirements for US citizens with foreign assets and the remedies for non-compliance. You will view the appropriate tax forms needed for reporting, due dates and penalty amounts. Te difference between willful and non-willful will be explained.
Find the hidden difference between finance and taxationcalltutors
Here you will get brief knowledge of the difference between the finance and taxation. And this difference of the finance and taxation will helps you a lot.
This session will focus on issues surrounding tax exempt bonds and techniques for completing Schedule K, refunding issues, considerations surrounding deemed reissuance and more.
Four steering system is about the maneuvering of the wheel using all four wheel. Which allows the vehicle to take sharp turn at slow speed and decrease the rollover accident danger at higher speed.
Reporting Requirements for US Citizens with Foreign Assetsgppcpa
The presentation reviews the reporting requirements for US citizens with foreign assets and the remedies for non-compliance. You will view the appropriate tax forms needed for reporting, due dates and penalty amounts. Te difference between willful and non-willful will be explained.
Find the hidden difference between finance and taxationcalltutors
Here you will get brief knowledge of the difference between the finance and taxation. And this difference of the finance and taxation will helps you a lot.
This session will focus on issues surrounding tax exempt bonds and techniques for completing Schedule K, refunding issues, considerations surrounding deemed reissuance and more.
Four steering system is about the maneuvering of the wheel using all four wheel. Which allows the vehicle to take sharp turn at slow speed and decrease the rollover accident danger at higher speed.
1.( T or F ) An individual who directly owns real estate and earns n.pdfrishabjain5053
1.( T or F ) An individual who directly owns real estate and earns net rental income for the tax
year January 1 – December 31, 2018 will have an effective tax rate of 29.6% on it.
2.( T or F ) Jumbo LLC, is treated as a partnership and is owned by 50% by two individuals, Rod
and Tom. Jumbo LLC acquired Bighorn Center, an industrial rental property for $2 million and
collects rent from tenants. When Bighorn Center’s value increases to $3 million, Jumbo
refinances the debt and distributes $500,000 to both Rod and Tom. Rod and Tom treat the
$500,000 as ordinary income subject to a 39.6% tax rate.
3.( T or F ) A gain resulting from the sale of REIT shares when that REIT is domestically
controlled will not result in any U.S. federal income tax withholding for non-U.S. holders of the
REIT stock.
4.( T or F ) A general partnership can be taxed as a corporation if so elected under the check the
box rules.
5.( T or F ) An individual investor can own 100% of a REIT.
6.( T or F ) Since dividends are not UBTI, a tax exempt investor will not have UBTI on dividend
income when debt is used to purchase the stock that paid the dividend.
7.(T or F) An individual, who qualifies as a real estate professional, can treat a particular rental
real estate activity as non-passive even when that individual does not materially participate in the
real estate activity.
8.(T or F) Withholding tax to non-US investors on interest income and dividends may be reduced
under the terms of a treaty.
9. Assume a building, owned by a REIT, increases in value and the REIT that owns it sells the
building for $120 million and then makes a capital gain distribution to its shareholders. Which of
the following is true regarding a U.S. individual investor\'s tax treatment:
A. The gain on the sale will be taxed at the ordinary income tax rate.
B. The gain on the sale will be taxed at the capital gain tax rate.
C. There is no tax on the net gain at the shareholder level.
D. The tax treatment is the same for the US investor as it is for the foreign investor.
E. None of the above.
11. Provide the tax that would be applied for each of the following:
1. Withholding tax on passive-type income (interest, dividends, etc..) for non-US investors with
respect to US source income. _______________.
2. Tax imposed on a foreign corporation based on a deemed distribution of US branch
operations____________________.
3. Withholding tax on US business income income that is effectively connected with a United
States trade or business. ______________.
13. Which of the following would cause the largest problem for an individual who wants to be
taxed as a real estate professional (which one would be the most difficult to overcome if an
individual wanted to be treated as a real estate professional)?
A. The individual owns only rental real estate properties and spends all of his/her time managing
them.
B. The individual works for herself as a commissioned real estate broker and invests in one
rental property on the.
The Intersection of Bankruptcy and... Tax Law (Series: Bankruptcy Intersectio...Financial Poise
The issues created by the intersection of bankruptcy law and tax law are complex and marked by the tension between the fundamental goal of the federal bankruptcy laws is to give debtors a financial "fresh start" from burdensome debts and the applicable federal income tax laws. As a result, certain tax liabilities are not dischargeable in bankruptcy. Moreover, a debtor generally continues to be subject to applicable federal income tax laws and must timely file federal income tax returns and pay federal income tax.
To listen to this webinar on-demand, go to: https://www.financialpoise.com/financial-poise-webinars/intersection-of-bankruptcy-and-tax-law-2020/
Startup Basics: Money People and TechnologyRoger Royse
The Royse Law firm offers significant advise that early stage startups should ensure they understand. The slides contain great considerations that startups should utilize. Our team is a full service firm that provides legal counseling to many startups. Please contact us so we can help you ensure the health of your startup. (01/2018)
Doing business in an international context can be daunting. WeiserMazars serves as a bridge between the United States and the global markets, making doing business easier and less risky for our clients. We connect overseas clients with American professionals and service the tax, transaction services and financial reporting needs of foreign entities based in the U.S.
Catherine Mosbacher with the Center for Houston's Future presents two very different Scenarios for the future of H-Town. This is her powerpoint presentation. The videos on the two scenarios are separated out for you to view individually.
Torun Center Residences Istanbul - Listing TurkeyListing Turkey
THERE IS LIFE IN ITS CENTER!
The most energetic spot of the city that will add utterly different pleasures to your life, with a park that will make Istanbul breathe, delighting indoor and outdoor bistros, cafes, restaurants, the brand-new Food Hall concept, where dozens of unique tastes are served together, market area, cinema, theater, fitness club, SPA and event venue...
All the pleasures that will enrich your lives are awaiting you on the most beautiful side of the city, at Torun Center Residences. In Mecidiyeköy, where the heart of Istanbul beats, business, life and entertainment opportunities are located at the exact center, at Torun Center, the most beautiful side of the city.
Penthouse apartments and different styles of flats from 1 + 1 to 4 + 1, from 100 to 425 square meters in a 42-story residence tower, have been designed for those who want to live in the center of magnificence. Torun Center is the redefinition of a better life with specially landscaped floor gardens, apartment options with private balconies, and automatic glass systems equipped with Trickle Ventilation that offers clean air comfort.
Business and life in the same place
Excellent service
Torun Center has many delightful details, from a swimming pool to sunbathing and resting terrace. With 24/7 concierge services, 24/7 security, valet, technical service, closed-circuit camera system (CCTV), central heating and cooling system, it makes your life easier.
Delightful details
The two-story Torun Center Lounge, with its indoor and outdoor seating areas, children's playroom, private dining and TV lounge, promises unforgettable memories to you and your loved ones with its unique Istanbul view.
Neighboring to the most pleasant square of Istanbul
A few steps from the Torun Center Residences, you can reach the city's most modern city square and open the doors of a quality city life. Torun Center Residences brings together on the same project the long-awaited city life for Istanbul and gourmet restaurants, cafes, gym and SPA, and state-of-the-art cinema and Artı Stage, hosting the most famous plays of the season.
Located at the intersection of alternative public transportation options such as the metro and Metrobus, Torun Center comes to the fore as the most accessible office for both sides of Istanbul. With a central location and rich transportation lines, Torun Center offices make life easier for employees and increase productivity.
Brigade Insignia offers meticulously designed apartments with modern architecture and premium finishes. The project features spacious 3,3.5,4 and 5 BHK units, each thoughtfully planned to provide maximum comfort, natural light, and ventilation.
https://www.newprojectbangalore.com/brigade-insignia-yelahanka-bangalore.html
Presentation to Windust Meadows HOA Board of Directors June 4, 2024: Focus o...Joseph Lewis Aguirre
Presentation to Windust Meadows HOA Board of Directors June 4, 2024: Focus on Public Safety as Job #1, Engagement, Wealth of HOA, Branding, Communication, Culture, Civic Responsibility
Elegant Evergreen Homes - Luxury Apartments Redefining Comfort in Yelahanka, ...JagadishKR1
Experience unmatched luxury at Elegant Evergreen Homes, offering exquisite 2, 3, and 4 BHK apartments in the serene locality of Yelahanka, Bangalore. These meticulously crafted homes blend modern design with timeless elegance, providing a harmonious living environment. Enjoy top-tier amenities and a prime location, making Elegant Evergreen Homes the ideal choice for discerning homeowners.
Scanning tenants in NYC requires a thorough and compliant approach to ensure you find reliable renters. For a positive rental experience, consider hiring a property management service. Belgium Management LLC specializes in NYC rental property management and tenant relationship management. We prioritize tenant satisfaction, making us a trusted name in New York property management. Our dedicated team ensures tenants feel valued and supported throughout their lease.
Urbanrise Paradise on Earth - Unveiling Unprecedented Luxury in Exquisite Vil...JagadishKR1
Immerse yourself in the epitome of luxury living at Urbanrise Paradise on Earth. These opulent 4 BHK villas, nestled off the prestigious Kanakapura Road in Bangalore, redefine elegance and sophistication. With meticulous craftsmanship, breathtaking design, and unparalleled amenities, Urbanrise Paradise on Earth offers a sanctuary where every moment is infused with luxury and serenity. Experience a life of grandeur and indulgence at this exclusive residential enclave.
The KA Housing - Catalogue - Listing TurkeyListing Turkey
Welcome to KA Housing, a distinguished real estate development nestled in the heart of Eyüpsultan, one of Istanbul’s most promising districts.
Just 10 minutes from the bustling city center, Eyüpsultan offers a serene escape with the convenience of urban living. The direct metro line ensures seamless connectivity to all parts of Istanbul, making it an ideal location for residents who seek both tranquility and vibrancy.
KA Housing boasts unparalleled accessibility, with proximity to Istanbul Airport only 30 minutes away, facilitating easy international travel. Effortless city access is guaranteed by direct metro and transportation links to Istanbul’s cultural and commercial hubs. Quick access to key metro lines connects you to every corner of the city within minutes, making commuting and exploring the city hassle-free.
The development offers luxurious living spaces with a range of unit layouts from 1+1 to 4+1, designed with meticulous attention to detail. Each unit features balconies or terraces, providing stunning vistas of Istanbul and enhancing the living experience. High-quality materials and superior craftsmanship ensure durability and elegance, while sound-proof insulation and high ceilings (2.95 m) offer comfort and sophistication.
Residents of KA Housing enjoy exclusive on-site amenities, including a state-of-the-art gym, outdoor swimming pool, yoga area, and walking paths. Entertainment options abound with a private cinema, children’s playground, and a variety of dining options including a café and restaurant. Security and convenience are paramount with 24/7 security, a dedicated carpark garage, and an IP intercom system.
KA Housing represents a prime investment opportunity with limited availability in a high-demand area, ensuring enduring value and potential for lucrative returns. Homes in this development provide exceptional value without compromising on quality, offering affordable luxury for discerning buyers. The construction is of the highest quality, built to the latest seismic and disaster resistance standards, ensuring safety and resilience.
The community and surroundings of KA Housing are enriched by close proximity to prestigious universities such as Haliç University, Bilgi University, and Istanbul Ticaret University, making it an ideal location for students and academics. The development is adjacent to the Alibeyköy stream leading into the Halic waters, offering serene natural escapes amidst lush greenery. Residents can enjoy the cultural richness of the area, surrounded by historical and cultural landmarks that blend leisure, nature, and culture seamlessly.
https://listingturkey.com/property/the-ka-housing/
Keep Your Home Naturally Cool and Warm Out Change in Seasons
Vinra Construction is a private limited company registered under the ROC. The management has an experience of over 15 years of understanding the needs and delivering apt solutions to the end users We are providing turnkey solutions in construction fields. like Construction, Interior Designing Facility Management, Plantation Management, etc..
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Need MCA leads? No sweat! MCAs are great for small biz funding. Learn how to snag top-notch leads: businesses needing cash, with repayment ability, decision-makers, and accurate contacts. Use content, social ads, lead platforms, partnerships, and capture processes for quality leads.
https://www.leadgeneration.media/blog/b/streamline-your-mca-sales-process-with-pre-qualified-leads
500 acres of brilliance await you here at Riverview City which offers modern living, effortless convenience, and a beautiful natural setting. It is a mega township by Magarpatta City in Loni Kalbhor, Pune. Enjoy easy access to work, schools, and fun while experiencing a perfect work-life balance.
Visit - magarpattacity.developerprojects.in
Referans Bahcesehir which is being constructed, in the center of the most regional destination as Bahçeşehir, shines out with its central location and unique landscape including social facilities such as a fitness center, sauna, sports facilities, children’s playground and recreational areas.
Not only drawing attention for immediate surroundings including commercial centers and private schools but also providing the easily accessible location with closeness to Tem Highway and connection roads, ongoing construction of 3rd Bridge Connection roads and Metro Projects
Bahcesehir is a rising value in the great city of Istanbul… Located at a new transportation junction in the northwest of the City… Located at such a spot that the access roads for the 3rd bridge and for the 3rd Airport will reach the region in 2016. The Marmaray and the Subway will extend all the way to Referans Bahcesehir respectively in 2018 and 2019.
465 flats and 34 stores are designed with an outstanding approach and arranged with a unique perspective offering the following options: 1 plus 1, 2 plus 1, 3 plus 1, 3.5 plus 1, 4 plus 1, and 4.5 plus 1. It is planned so as to safeguard you and your loved ones based upon a modern, technological safety approach. As you experience the joy and luxury here, you will be content and feet at ease.
It is worth seeing both inside and outside with heart-warming cafes, tasty restaurants and elegant stores… And it is ready to offer a vivacious social life with a warm and cozy space design.
A folding swimming pool and indoor swimming pools, playgrounds, Turkish bath, sauna… It has them all. Everything you need for your well-being and for having a pleasant time will be at your service. You simply need to align the rhythm of life with the rhythm of Referans Bahcesehir.
https://listingturkey.com/property/referans-bahcesehir/
The SVN® organization shares a portion of their new weekly listings via their SVN Live® Weekly Property Broadcast. Visit https://svn.com/svn-live/ if you would like to attend our weekly call, which we open up to the brokerage community.
One FNG by Group 108 Sector 142 Noida Construction UpdateOne FNG
One FNG by Group 108 is launching a new commercial project in Sector 142 Noida. Office space and high street retail shops on the FNG and Noida Expressway. For more information visit the website https://www.onefng.com/
Rixos Tersane Istanbul Residences Brochure_May2024_ENG.pdfListing Turkey
Tersane Suites Residences is a luxurious real estate project located in the heart of Istanbul, next to the beautiful Golden Horn. This unique development offers hotel concept residences with Rixos management, making it the perfect choice for both homeowners and investors.
The Tersane Suites Residences offers a wide range of options, from studio apartments to spacious four-bedroom units, all designed to the highest standard. The suites are finished with high-quality materials and feature modern, open-plan living spaces, fully-equipped kitchens, and large balconies with stunning views of the city and sea.
One of the standout features of Tersane Suites Residences is the Rixos management, which provides a truly exclusive and upscale living experience. Residents will have access to a range of luxury amenities, including a fitness center, spa, and indoor and outdoor swimming pools. Plus, the on-site restaurants and cafes provide a taste of the local and international cuisine.
The Tersane Suites Residences also offers a great opportunity for investors, as it provides a rental guarantee program. This means that investors can enjoy a steady income stream, with the peace of mind that their property is being managed by a reputable and experienced team.
The location of Tersane Suites Residences is also unbeatable, with easy access to the city’s main transportation links and within close proximity to the historic center, making it the perfect base for exploring all that Istanbul has to offer.
Lixin Azarmehr, a Los Angeles-based real estate development trailblazer, co-founded JL Real Estate Development (JL RED) in 2015 and serves as its CEO. Her expertise has propelled the firm to specialize in luxury residential and mixed-use commercial projects, with a portfolio that features upscale retail spaces and sophisticated care facilities.
Flat available for sale
Location- Tupudana, Ranchi
Savitri enclave
Area- 3BHK
Rate- 4000/sq.ft.
Super Build Up Area-1629 sq.ft.
Build-up area-1253 sq.ft.
Rate- 65lakh16k(approx)
Floor available- Flat available in all floor(G+12)
Balcony- 2
Washroom- 2
Parking - CAR PARKING
Amenities- Joggers track,temple, children's park,gym,banquet hall (5 Lakh)
Possession year (Handover year)- Dec 2025
Outside View from the apartment and flat balcony is very beautiful.
For more information contact AASHIYANA STAR PROPERTIES
7766900371
Investing In The US As A Canadian… And How To Do It RIGHT!! (feat. Erwin Szet...Volition Properties
=== Investing In The US As A Canadian… And How To Do It RIGHT!! (feat. Erwin Szeto) ===
Ever been curious about Real Estate Investing in the US?? At Volition, for the past 14 years, we have been focused on helping investors invest in over $250M of real estate and generate $100M of wealth in the Toronto market, but we are always open to learning more about other business models and learning from other investors.
The US has always been an intriguing market to invest in. But the US is a big place… if you’re interested in investing in the US, you probably have a lot of questions, like:
☑️ Specifically WHERE should you invest?
☑️ What are the best markets to invest in and why?
☑️ How much are property prices there?
☑️ What are the returns like?
☑️ What is cashflow like?
☑️ Compared to investing in Toronto or other cities in Ontario, what are the benefits / tradeoffs?
☑️ What ownership structure should I use?
☑️ What are the tax implications?
☑️ Can I get financing?
☑️ What are tenants like?
Enter Erwin Szeto, a longtime friend of Volition. Since 2005, Erwin Szeto and his team have navigated the challenging landscape of being landlords in Ontario. Now, they are shifting their focus and guiding their clients' investments toward the more landlord-friendly environment of the USA. This decision comes after assisting Canadian clients in transacting over $440,000,000 in income properties. Faced with issues like affordability constraints, tenant-friendly laws, rent control, and rental licensing in Canada, Erwin sees a clear opportunity in the U.S. Here, there is a significant influx of investments leading to the creation of high-paying manufacturing jobs. Erwin and his clients are poised to capitalize on these opportunities where landlord rights are stronger and there is no rent control.
To facilitate this transition, Erwin has partnered with and become a client of SHARE, a one-stop-shop U.S. Asset Manager. Founded by Canadians for Canadians, SHARE enables as passive an ownership experience as possible for landlords in the U.S., while still maintaining direct, 100% ownership.
Erwin is “Making Real Estate Investing Great Again”!!
Website: https://www.infinitywealth.ca/
Facebook: https://www.facebook.com/iwinrealestate and https://www.facebook.com/ErwinSzetoOfficial
Podcast: https://www.truthaboutrealestateinvesting.ca/
Instagram: https://www.instagram.com/iwinrealestate/ and https://www.instagram.com/erwinszeto/
Green Homes, Islamabad Presentation .pdfticktoktips
Green Homes Islamabad offers beautifully designed 5, 8, and 10 Marla homes near the airport and motorway. Enjoy luxury, convenience, and high rental returns in a prime location.
Hawthorn Module 1 Coverted to Slide Show - 04.06.2024.docx
International 101 - Next Steps in the Process (Allan Tiller)
1.
2.
3. II. Principal Tax Planning Objectives
For the most part, a foreign individual cannot escape U.S.
income taxation of his income from U.S. real estate. However
it is possible to escape estate taxation. Therefore, the
principal tax planning objective with respect to foreign
individuals investing in U.S. real estate is to avoid the U.S.
estate tax without causing tax problems that would not
otherwise arise under direct ownership.
Aside for tax minimization planning, a major concern is
managing the tax withholding obligations of the special U.S.
tax rules that apply to foreign persons, called “FIRPTA”
(Foreign Investment in Real Property Tax Act of 1980).
4. III. Who Is a Foreign Individual?
A. In general. For this discussion, a “foreign individual” is
someone who is both of the following:
1. an alien, that is, an individual who is not a citizen of the
United States, and
2. depending on which tax is the subject of concern,
either:
a. income tax - a “nonresident” alien;
b. estate tax- a “non-domiciled” alien, or more
technically, a “nonresident not a citizen of the
United States.”
5. B. Special income tax rules to determine
whether alien is “resident” or “non-resident”
of the U.S.
Generally, an alien is a “resident alien” for income tax purposes if
either:
1. he holds a “green card” (an Alien Registration Receipt Card”)
granting permanent residence in U.S.), or
2. he meets the “substantial presence” test, which is essentially a
day-counting test: generally, if the number of days present
during the current year, plus 1/3 of the number of days present
during the first preceding year, plus 1/6 of the number of days
present in the second preceding year equals or exceeds 183
days, he is a nonresident alien. However, there are several
important exceptions (not discussed here).
If the alien does not meet either of these tests, he is a “nonresident
alien” (“NRA”) for income tax purposes, referred to here as “a
foreign individual” or “foreign person.”
6. C. Definitional problems under the
estate tax.
Unlike for the income tax, Congress has never adopted specific
rules for determining “domicile“ for purposes of the estate tax. The
best we have is an IRS regulation that states:
A person acquires a domicile in a place by living there, for even
a brief period of time, with no definite present intention of later
removing therefrom.
Basically, this is a “we know it when we see it” test.
So, for this discussion, a “foreign individual” is an individual who is
an “alien” and who is a “nonresident alien” for income purposes
and a “non-domiciled alien” for estate tax purposes.
7. IV. Basic Rules of Taxation Of Foreign
Individuals Investing in U.S. Real Estate
A. The Income Tax.
1. Rental income - rental income from U.S. real property earned by a foreign
person is taxable under either of following regimes:
a. withholding - the default method is that the lessee (or the management
agent) is supposed to withhold and remit to the U.S. Treasury 30% of the
gross amount of rent, with no deductions (the 30% rate is generally not
reduced by tax treaties). As long as the withholding is performed (and
reported), the foreign lessor has no obligation to file a U.S. tax return.
b. “net basis” taxation – if the rental activity constitutes a “trade or business,”
or if the foreign individual makes a special election to treat the rental
activity as a trade or business, no withholding is required but the foreign
owner/lessor is required to file a U.S. income tax return. Tax is paid on the
rental income at normal tax rates (currently up to 39.6%), and – this is
important – deductions are permitted. Thus, while the “marginal” tax rate is
higher – 39.6% as opposed to 30% -- net basis taxation generally results in
a lower “effective” tax rate because of the deductions. However, if a tax
return is not timely filed, the deductions will be denied.
8. A. The income tax (continued):
2. Gain on sale – these are the famous“FIRPTA” rules, which essentially
have two parts:
a. taxation of gain – foreign persons are generally exempt from U.S.
taxation of capital gains, but gains on the sale or other transfer of
U.S. real property is taxable and must be reported with a U.S.
income tax return. There are some exceptions, however:
(i) gifts –there is no amount realized on a gift, so no FIRPTA
taxation, however, might be subject to U.S. gift tax;
(ii) exchange for another U.S. real property interest – in a
transaction that is generally non-taxable, such as a
contribution by a foreign person of a parcel of U.S. real
estate into a U.S. corporation that he owns and the real
estate comprises at least 50% of the corporation’s assets.
9. The other part of FIRPTA is:
b. withholding - generally, on the sale of U.S. property by a foreign
person, the purchaser (whether U.S. or foreign) must withhold and
remit to the U.S. Treasury 10% of the gross “amount realized”, which
usually means the price paid for the property. There are some
exceptions:
(i) personal residence of value no greater than $300,000 - if the buyer
will use as his residence for at least 50% of time during the first
two years of purchase and the “amount realized” is no greater than
$300,000, no withholding is required. Foreign seller is still required
to report his gain on U.S. income tax return.
(ii) withholding certificate obtained – withholding can be reduced or
eliminated if the seller applies for (generally with Form 8288-B)
and obtains from the IRS a “withholding certificate,” if actual tax on
gain is less than 10% of gross.
10. B. The estate (and gift) tax.
1. The estate tax - the estate tax is imposed on a foreign
decedent’s taxable estate at rates of up to 40% (currently),
although there is a tax credit equivalent to a value of
$60,000. For a foreign deceased, the “taxable estate”
generally consists of “U.S.-situs assets,” which generally
includes U.S. real property and ownership interests in U.S.
entities, with some still-unsettled rules concerning pass-through
entities such as partnerships
2. The gift tax is a close relative of the estate tax, imposed on
the value of gifts made prior to death. However, there is a
big exception that does not apply to the estate tax:
intangible assets, including stock of corporations, are not
subject to the gift tax, when the donor is a foreign
individual. This provides planning opportunities.
11. V. Basic Planning Alternatives.
As noted above, the main tax planning concern for foreign
individuals investing in U.S. real estate is to avoid the U.S.
estate tax without causing tax problems that would not
otherwise arise under direct ownership. Some of the problems
that could arise:
(i) imposition of the gift tax on putting a structure in place
to avoid estate tax;
(ii) losing the availability of the 15%/20% long-term capital
gain rate under the income tax by using a corporation;
and
(iii) multiple tiers of income taxation which could arise if
using a corporation as part of the plan.
12. Basic Planning Alternatives (continued).
A. Using a foreign (non-U.S. corporation - holding U.S. real estate
through a foreign corporation in a non-tax jurisdiction (commonly
referred to as a “tax haven”) avoids the U.S. estate tax simply
because stock of a foreign corporation is not considered to be a
“U.S.-situs” property.
1. Benefits - simplicity, flexibility.
2. Disadvantages:
a. possible imposition of the U.S. “branch profits” tax,
which applies only to foreign corporations;
b. the loss of 15%/20% long-term capital gain rate, since
corporations pay ordinary rates (up to 39.6%) on capital
gains; and
c. dealing with succession issues, how to pass the stock
upon death.
13. Basic Planning Alternatives (continued).
B. Using an irrevocable trust - irrevocable trusts are commonly used in
U.S. estate planning, but foreign individuals are often leery of turning
over control to a third party “trustee”.
1. Benefits- avoids the disadvantages of using a foreign
corporation, especially the loss of the 15%/20% income tax rate
on gains.
2. Disadvantages:
(a) inflexible - in order to avoid inclusion of trust assets in the
U.S. taxable estate of the trust creator, the trust must be
irrevocable;
(b) very limited beneficial interest and control retained by
creator.
C. Taking a chance - the foreign individual can simply take a chance
that he will dispose of the property before being
hit by a bus.
14. VI. Risks to “withholding agents.”
A. Obligations of “withholding agents” – in the context of foreign
owners of U.S. real estate, a “withholding agent” is a party that
is required to withhold a portion of a payment to a foreign
person and remit the withheld portion to the U.S. Treasury.
Withholding obligations will generally arise on rental payments
and/or on proceeds on the sale of the property.
B. Penalties for failure to withhold – can be “draconian”: the agent
can be responsible for the tax, as well as for interest and
extensive penalties for failure to withhold and report the
payment and withholding.
C. Penalties for failure to provide notice of false statement or
certification – on sales of real estate, there are also penalties for
failure to notify parties to a transaction if, for example, a foreign
seller provides a “certificate of non-foreign status” and the
agent knows that the seller is a foreign person. The class of
persons to whom this obligation applies is broader than the
class obligated to withhold.
15. D. Who is a “withholding agent”? The definition of “withholding agent”
differs somewhat based on whether the withholding is for rental
payments or for the proceeds of the sale of real property:
1. Rental payments - the IRS regulations define “withholding agent”
for this purpose rather broadly:
“Any person, whether U.S. or foreign, that has the control,
receipt, custody, disposal, or payment of an item of income of a
foreign person subject to withholding” [Reg. Sec. 1.1441-
7(a)(1)].
The regulations contemplate that there can be multiple
withholding agents with respect to any particular payment, but
withholding by one relieves the others from any obligation or
liability.
Thus, if a property manager for commercial real property collects
rental payments from tenants in Houston and remits the rent to a
foreign owner, both the tenant and the manager are “withholding
agents.” If the manager withholds, however, the tenant is
off the hook.
16. D. Who is a “withholding agent”? (continued) :
2. FIRPTA withholding - for the most common FIRPTA transaction,
the sale of real property by a foreign owner, the IRS regulations
provide simply that the transferee is the withholding agent. This
greatly reduces the number of people who might be held
responsible for the 10% withholding tax, at least with respect to
IRS penalties, but there could be lawsuits if a realtor for a buyer
or a title company failed to advise the buyer of his FIRPTA
withholding obligations.
More significant in the FIRPTA context is the previously-mentioned
obligation of both “transferor’s agents” and
“transferee’s agents” to notify both the parties involved and the
IRS if the agent has actual knowledge that a certificate of non-foreign
status is false. (As a practical matter, this should include
“have good reason to suspect that the certificate was false but did
nothing about it”.) An agent for a foreign corporation seller is
deemed to know that the corporation is a foreign person.
17. E. How to know whether the payee/recipient is a “foreign person” As
with the definition of “withholding agent,” the rules for identifying a
foreign payee differ somewhat based on whether the withholding is
for rental payments or for the proceeds of the sale of real property:
1. Rental payments - the IRS has complex “presumption” rules in this regard, but frankly,
most lessees have no idea what these rules are and instinctively rely on the “we know
one when we see one” method, that is, if the lessor has a U.S. address and does not
speak with too strong an accent, the lessee assumes that there is no special reporting
and withholding requirement, especially if the lessee is an individual leasing the
property for his personal use. The lessee is often right. Nevertheless, if he (the lessee)
is wrong, he is potentially liable for the 30% withholding tax plus interest and penalties.
The best way to be safe is for the lessee to require one of the following forms from the
lessor (as long as the lessor does not have actual knowledge that is form is false):
(i) Form W-9 – the form requires the lessor to provide a U.S. social security number
(or “individual taxpayer identification number”) and a promise by the lessor that he
is a U.S. person;
(ii) Form W-8BEN – the lessor promises that he is a foreign person and is therefore
subject to 30% withholding; or
(iii) Form W-8ECI – the lessor promises that he is a foreign person, but also swears that
the rental activity is a “trade or business” (including by making a “net basis
election”) and that he will dutifully file a U.S. income tax return to report the rental
income, thereby relieving the lessee of the obligation to
withhold.
18. E. How to know whether the payee/recipient is a “foreign person.”
(continued).
2. FIRPTA withholding – as with withholding on rental payments, a buyer of U.S. real
estate can take a chance that the seller is not a foreign person, but if it turns out that
the seller is a foreign person and the buyer did not withhold, the buyer will be liable for
the 10% withholding amount plus interest and penalties. The more prudent buyer –
and his realtor who is advising him – will insist on one of the following written
instruments, on which the buyer can rely if he has not actual knowledge that it is false:
(i) a certificate of non-foreign status – an IRS regulation sets forth what such a
certificate must contain, including the individual seller’s social security number. If
the buyer requests such a certificate but the seller does not provide it, the buyer
should presume that the seller is foreign and do the withholding, so says the IRS;
or
(ii) a withholding certificate issued by the IRS – which eliminates or reduces the
withholding. If the seller has requested such a certificate but has not received it by
the time of closing, there are special rules as to what the buyer must do;
(iii) if a foreign seller is able to convince the buyer to rely on the $300,000 personal
residence exception, the agent of the buyer should obtain an “affidavit of intent”
from the buyer whereby the buyer acknowledges that he must comply with the
rules for use of the property as a personal residence for the time required and
intends to so use the property.
This list is not exhaustive, but covers most transactions in
which realtors are involved.
19. BOTTOM LINE:
In this modern, globalized economy, especially in
Houston with its very large multi-national population,
a real estate agent faces substantial exposure to
either being personally liable for withholding tax or
to liability to his/her client for failing to protect
him/her from such tax liability. As with other such
professional risks, this risk can be minimized with
attention to the rules, proper due diligence, and a
good insurance policy.
THE END