Foreign Investors in U.S. Real Estate

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The U.S. real estate market is an attractive financial option for foreign investors seeking to stabilize, strengthen, or diversify their portfolios. Income and withholding tax requirements imposed by the IRS for these transactions are complex. Failure to follow the complicated declaration procedures could result in additional penalties plus interest.  If you have rental income from U.S. properties or U.S. real property investments as a foreign taxpayer, you need a skilled CPA working to manage your affairs.

Contact me today at (541) 923-0903. I’ll put more than 20 years of experience in international tax preparation to work in seeing that you pay the least amount of taxes possible allowed under the law.

US Tax Help for Investors

Responsibility of Foreign Property Owners to Pay Taxes

If you own and rent out real property in the United States, the IRS will require you to pay taxes on income received from the property regardless of your personal tax status. It won’t matter if an income treaty exists with the foreign country where you live and the United States. Filing taxes based on income you receive from renting property here in the United States requires extensive filing documents, including Form 1042-S. All told, your gross income from U.S. rental properties is subject to a 30 percent withholding requirement. This can be substantially reduced with the proper elections and application of tax treaty provisions. Do you know to catalog those line items properly to maximize your tax deductions? Are you worried that a single mistake could lead to a costly IRS audit? Here’s how I can help you:

  • Trust in my Experience: I do not accept any work I’m not 100 percent confident that I can deliver positive results for, leaving you completely satisfied.
  • Membership in Prestigious Accounting Organizations: I have the endorsement of multiple peer organizations, including the Oregon Society of Certified Public Accountants and the American Institute of Certified Public Accountants.
  • Specializing in International Taxes: I have a keen focus into international financial planning and tax law. I’ve worked closely with hundreds of clients to solve their real estate investment matters by leveraging every available deduction and tax credit to minimize exposure.

Here’s just a sample of the various tax services I provide:

  • Reporting requirements
  • Tax basis of assets
  • Estimated tax requirements
  • Death taxes
  • Gift taxes
  • Disclosures (i.e. transactions with owners and other related parties, etc.)
  • Withholding taxes on payments outside the US or California (i.e. dividends, interest, etc.)
  • Special tax rates
  • Cash flow projections
  • Tax on sale calculations
  • Preparation of federal and state income tax returns, withholding returns, exemption applications, and other reports (U.S. Department of Commerce, etc.).
  • Selection of proper structure
  • Treaties
  • State income tax (unitary tax issues)
  • Identification of available deductions such as inspection trips, management fees, depreciation, amortization, etc.
  • Determination of timing of income and deductions (now, later or never).
  • Recommendations regarding payroll and employee fringe benefits.

International Investment in U.S. Real Estate on the Rise

Private citizens and even foreign governments continue to buy up real property in the United States. Norway alone has more than $870 billion in U.S. land in its sovereign-wealth fund, including buildings in high-value cities like San Francisco and New York. The trend may only increase as the housing market recovers and property values begin to rise again. The most popular cities for foreign investors to buy land in the United States in 2014 include: New York City, San Francisco, Houston, and Washington, DC.

Adding U.S. property to your own investment portfolio is a sound financial maneuver, but doing so requires careful tax preparation. Even if you only plan on earning passive rental income, you need to consult with an international tax CPA to ensure you’re protected. If the IRS decides that your interest in domestic real property constitutes being “engaged in a U.S. trade or business,” the entire game changes for your filing requirements and exposure to tax liability. What may have only been a flat tax paid through withholding could turn into a full-scale investigation demanding much larger payouts to the federal government.

If you’d rather not contact US Tax Help by phone, you can reach me through our contact form or by email at any time — day or night. I remain dedicated to resolving your foreign investor tax matter in the fastest amount of time possible.

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