Real Estate Pillar - H&CO | Global Advisors

Browse through this step-by-step menu and find everything relevant to investing in real estate in the United States as a foreign investor

Individual Ownership

One level of tax at the NRA level
Preferential capital gains rates (the maximum capital gains rate for NRA individuals is 20% - NIIT does not apply (3.8%)
In Florida – no additional personal income tax
Cost efficient structure

LLC (Limited Liability Companies) are transparent when owned by 1 person, therefore same effect as individual ownership
The NRA will file an individual tax return- full disclosure and passport certification requirements
U.S. real property directly owned by an NRA on his death is subject to U.S. estate taxes
Upon sale or transfer, the NRA will be subject to FIRPTA
FIRPTA requires withholding of 15% of the fair market value of the real estate
If the tax on the capital gain is less than the 15% withholding, the NRA can claim a refund
If the tax on the capital gain is more than the 15% withholding, the NRA has additional liability

Shares of a foreign corporation owned by an NRA on his death are NOT subject to U.S. estate taxes
FIRPTA does not apply (if the U.S. Corp. liquidates)
The NRA does not need to file a U.S. tax return – only return filed at the U.S. Corp level
Flat tax rate of 21% (not variable)

Dividends paid by U.S. Corp to FC or any foreign shareholder will be subject to a 30%
U.S. dividend withholding tax (unless liquidation of the U.S. Corp.or reduction by a treaty)
U.S. corporations are taxed on a net basis at a flat rate of 21%, an all of its income, including capital gains
State income tax applies to corporations. In Florida its 5.5% but there is a $50,000 of taxable income excluded

Shares of a foreign corporation owned by an NRA on his death are NOT subject to U.S. estate taxes
FIRPTA does not apply (if the U.S. Corp. liquidates)
The NRA does not need to file a U.S. tax return
Losses from one project can be offset against income from another project – liability can be limited to each LLC
The U.S. Corp is filing one tax return/ No filing at personal level/ no passport certification

Dividends paid by U.S. Corp to FC will be subject to a 30% U.S. dividend withholding tax unless reduced by a treaty
U.S. corporations are taxed on a net basis at a flat rate of 21%, an all of its income, including capital gains
State income tax applies to corporations. In Florida its 5.5% but there is a $50,000 of taxable income excluded
More expensive structure to maintain

Possible protection against U.S. estate taxes
One level of taxation for ordinary income (rental income)
Preferential capital gains rates (the maximum capital gains rate for individuals is 20%)

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