Lancaster & Reed has been providing tax consulting and compliance services for nonresident alien (NRA) real estate investors for over 30 years. Owning US real estate can subject a NRA investor to both US estate and gift taxes if owned directly (gifts of US situs assets by NRAs, including real estate, should be avoided). NRA investors must carefully consider these tax implications along with income taxes when considering how the US real estate investment will be held/titled.
Proper planning such as purchasing the real estate investment through a “Two Tier Partnership” structure may serve not only to insulate the nonresident alien investor from US estate tax, but also to facilitate capturing future gains on disposition at more favorable long term capital gains tax rates vs. traditional corporate holding structure. This can result in income tax savings of over 50% vs. traditional holding structures.
Foreign Investment in Real Property Tax Act (FIRPTA)
In addition, Lancaster & Reed routinely handles Foreign Investment in Real Property Tax Act (FIRPTA) matters for our clients, realtors, closing agents and attorneys including Form 8288, Form 8288-A & 8288-B FIRPTA withholding certificates. We understand the importance of meeting closing date requirements and ensure that our clients are paying in only the minimum tax required to be withheld.
“One Stop” Service for NRA Real Estate Investors
In addition to the above, we offer “One Stop” service to the realtors & attorneys that we work with on real estate matters. We will assist your NRA client with setting up the proper structure, ongoing tax compliance services (annual income tax returns), annual structure maintenance (filing of annual corporate state reports) as well as Form W-7 Application for IRS Individual Taxpayer Identification Number (ITIN) & registered agent services. Maintaining proper compliance ensures that your client is paying the minimum taxes possible and is not unduly exposed to penalties and interest charges by tax authorities associated with noncompliance. For more information please contact our office.