Blog   /   US Real Estate Investments

May 26, 2017 - Phil Hodgen

Nonresident Real Estate Investors, Rental Income, and No Tax Returns Filed

What happens to a nonresident who owns U.S. real estate and — gasp — does not report the rental income on a U.S. tax return? What is the tax risk to that nonresident investor? And how can that investor fix the problem?

In this article I will discuss the following topics:

• How does the United States tax rental income received by a nonresident owner of U.S. real estate?
• What are the tax return requirements for that nonresident investor in U.S. real estate?
• What can a nonresident do if he has not filed U.S. tax returns and reported (and paid tax on) the rental income collected?

... continue reading

December 9, 2016 - Phil Hodgen

Who’s On the Hook for Withholding Tax Failures?

This week I want to cover a real estate situation, and the perils of being a withholding agent when there is a foreign seller of U.S. real estate.

Foreign Corporation as Seller

From time to time I see foreign corporations as direct owners of U.S. real estate. This can work from a U.S. tax point of view (i.e., it can block the application of estate tax on the real estate if the shareholder dies).

But it creates a host of practical problems. And solving those practical problems will sometimes beget more practical problems.

This time I am going to explore the fine points of withholding tax on the sale of U.S.... continue reading

August 5, 2016 - Phil Hodgen

Avoiding Banking Problems with Corporate Reorganizations

Hello again, and welcome to the Friday Edition. More international tax goodies this Friday and every other Friday.

It’s Phil Hodgen and you signed up for this road trip. (I never add people to the mailing list — I hate getting spam and I will not inflict it on others). If you want to stop getting this, there is an unsubscribe link at the bottom of this email that will do the trick.

Nonresident Seller and No U.S. Bank Account

This week’s episode is for nonresident investors in U.S. real estate. Specifically, I am going to talk about an expedient method I have used before (and will use again) to get around a banking problem.... continue reading

June 24, 2016 - Phil Hodgen

Trust Structures for Nonresident Real Estate Investors

Nongrantor trusts offer excellent tax performance for nonresident investors in U.S. real estate:

• Estate tax risk is eliminated; and
• Long term capital gains tax treatment applies to capital gains.

But everything has its price. These excellent tax results come at the expense of:

• Significant set-up costs.
• Significant operating costs.
• Loss of control.
• Capital — and capital gain — no longer belong to the investor.

Shameless Promotion: More on July 8, 2016

This episode of the Friday Edition gives you an overview of the benefits and risks. If you want more detail, you might consider an upcoming webcast/phone presentation on the topic.... continue reading

June 10, 2016 - Phil Hodgen

Pooled Capital for Real Estate Investments by Nonresidents

Holding Structures for Pooled Nonresident Real Estate Investment

A group of nonresident individuals want to pool their money to buy commercial real estate in the United States.

They are going to buy decent-sized properties — commercial and office properties in the $5 million to $50 million range. This is serious money but not crazy huge.

How should they set this up for optimum U.S. tax results?

The Factors to Consider

The factors to consider are:

• Estate tax. People die, and when they do, the Internal Revenue Service looks around to see if there are any assets can be taxed. Nonresident individual investors can — and should — eliminate that estate tax risk.

... continue reading