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What are the US Tax Responsibilities of Foreign Real Estate Investors?


The good news for foreign investors into US real estate - they do not need to report to the IRS the value of the US property in their possession when filing their US annual income tax return.

However, once a foreign person acquires real estate located in the U.S., she/he will be required to annually file a Form 1040NR, US Non-Resident Tax Return. There is also a potential obligation to file state income tax return in the state in which the LLC is formed and/or where the property is located. Rental income earned from the property must be reported and tax on that income must be paid. Foreign persons are not required to report income earned outside the U.S and is unrelated to the rental property.

In order to file first U.S. tax return, a foreign investor will need to obtain an Individual Taxpayer Identification Number (ITIN). The process can be complicated and can take up to 8 weeks to complete.

When disposing of US real estate, the foreign investor may be required to pay U.S. estate tax, be subjected to FIRPTA regulations, or complex tax regulations for foreign shareholders or partners. Proper real estate exit tax strategy is always required.

At Capital Protection Alliance, we have the experience and knowledge to address the needs of non-residents investing in U.S. real estate. Please contact your Trusted Tax Advisor at http://capitalproalliance.com/helpstep1_real_estate/