U.S. real estate is generally a great investment for nonresidents. There are almost no legal barriers to such investment. Nonresidents can own U.S. real estate without restriction just like residents of the U.S. You are not required to be a U.S. citizen, or a green card or visa holder.
A well-researched and planned purchase will likely yield good investment returns.
For many of our clients, U.S. real estate investment is also a bet on exchange rate for the U.S. dollar as well as the regular expected investment returns. Even the exchange rate alone is perceived as an important investment criterion for those who buy a house in the U.S. in order to make a passive investment with high returns.
Investment Return and Taxes
Taxes reduce investment returns, including rentals. An investment decision made without analyzing financial and tax consequences can only be as good as rolling the dice.
Real estate is no longer a guaranteed bet in the U.S.
We caution you from buying U.S. real estate without understanding and estimating your after-tax return on investment, and making the relevant calculations.
Taxes Are Always Due
Some taxes are inevitable. Your income from rentals will be taxed. When you sell your real estate in the U.S., your gains will be taxed.
You can make healthier decisions taking into account taxes, e.g. taxes that arise during the sale of your house in the medium or long term, estate tax in case of death, and inheritance tax while distribution of assets.
When it comes to U.S. real estate investments, the best a nonresident can achieve is to be taxed like a U.S. resident.
Estate Taxes
The estate tax or the “death tax”, taxing your wealth at the time of your death, can be avoided with careful planning.
✔If a nonresident investor buys U.S. real estate with the correct structure, there is no estate tax.
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If a nonresident investor buys U.S. real estate with the correct structure, there is no estate tax.
However, if they buy it with the wrong structure or under their own names, the estate tax burden can be as high as 40% of the value of the equity at the time of the death of the investor.
Gift Taxes
Gift tax can be due at the same high rates as the estate tax if U.S. real estate is gifted by a nonresident investor.
Accordingly, careful planning in gifting U.S. real estate is essential, without it, the tax rates can be as high as 40%.
Avoidable Taxes
You can avoid some U.S. taxes with careful planning.
Tax and Legal Guidance
We specialize in international tax. We are experienced in planning and handling taxes imposed on nonresident investors. In many cases, we work with our clients to help guide them in:
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Devising methods and creating structures to minimize taxes,
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Their tax projections,
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Cost estimates for various steps of the process,
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Legal advice on purchasing the property.
Tax Planning & Fixing Badly Set Up Investments
Buying the property correctly is the most important step to minimize taxes.
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Who is the owner?
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What is that owner’s tax and legal status?
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Should you buy U.S. real estate as an individual, or through a company?
We know how to set things correctly from the start depending on your personal situation and commercial expectations. We use corporations, partnerships, trusts, debt, and other methods to save our clients U.S. taxes.
We also up badly structured real estate investments if it is still possible. We reconfigure the structure to achieve better tax results, and try to do it in a cost effective manner.
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Photo 📷 Enric Cruz López @pexels
