Withholding when Nonresidents Own U.S. Rental Real Estate

Proving the Obvious In a quick email exchange I had with Susan Brown Otto (hi Susan) we touched on a topic that deserves attention. The topic is not terribly difficult, but its existence points to a meta problem. Susan’s question/comment was about the non-requirement of withholding that is required when nonresidents own U.S. rental real…

How Should I Own My U.S. Real Estate?

How I Think About Real Estate Holding Structures Foreign investors in U.S. real estate always have the same question: How should I own the real estate that I am buying in the United States? This is how I think when I think about that question. If you sit down in my conference room and talk…

US real estate miniseries #4 – foreign corporation plus income tax treaty

Hi, it’s Phil Hodgen again. Welcome again to the Friday Edition. This episode is written from seat 3E on American Airlines flight 126 — LAX to Chicago. Wifi in the sky for the win, right? (Also: Bose noise-cancelling earbuds are essential for flying sanity and preventing the post-flight head-buzz from all of the engine noise….

US real estate miniseries #3 – foreign parent, domestic subsidiary

Hi, it’s Phil Hodgen again. Welcome to the Friday Edition. If you want to stop getting this thing every Friday, just click the “unsubscribe” link at the bottom of this email. I won’t be offended. On the other hand, if you want more emails like this, you can sign up for one of our other…

US real estate miniseries #2 – direct foreign corporation ownership

Hi, it’s Phil Hodgen again. Welcome to the Friday Edition. If you want to stop getting this thing every Friday, just click the “unsubscribe” link at the bottom of this email. I won’t be offended. On the other hand, if you want more, you can sign up for one of our other mailing lists. Real…

US real estate miniseries #1 – direct ownership

Hi, it’s Phil Hodgen again. Welcome to the Friday Edition. If you want to stop getting this thing every Friday, just click the “unsubscribe” link at the bottom of this email. I won’t be offended. On the other hand, if you want more, you can sign up for one of our other mailing lists. Real…

When buying a home is a forex transaction

Hi, it’s Phil Hodgen again. Welcome to the Friday Edition. This week’s episode is coming from Wall Street. (Well, technically the intersection of Water Street and Wall Street.) I’m here to give a presentation to the New York State Society of Certified Public Accountants on expatriation. If you want to stop getting this thing every…

Donald Rumsfeld, Unicorns, and Tax Homes for Digital Nomads

Greetings again, digital nomads. This week we’ll go back to basics: the foreign earned income exclusion. Form 2555.

I’m going to show you an element that is almost universally ignored by everyone. They’re probably right to ignore the problem, but it is important to know that a problem exists, and why you can safely ignore it. This week’s episode is buried, in other words, somewhere in Donald Rumsfeld’s brain. I aim to take an known-unknown and make it a known-known, so you can then ignore it with impunity.

Why you can’t take a tax deduction for that (FIRPTA edition)

We (the team here at HodgenLaw PC) will be presenting a series of four webcasts for the California Society of Certified Public Accountants. I am preparing the first set of webcasts on a topic I really like – U.S. real estate investments by nonresidents. Shameless sales promotion: you should sign up for the CalCPA webcast.

This week’s Friday Edition is spawned by me being hip-deep in that topic.

TL;DR

Nonresidents who own vacation homes in the United States cannot take tax deductions for any of the costs of ownership.

Branch profits tax for nonresident investors in U.S. real estate

Comment: This little FAQ is a simple (for certain values of $SIMPLE) 🙂 explanation of the branch profits tax for nonresident investors in U.S. real estate. As a general principle it is a Very Bad Idea for nonresidents to own income-generating U.S. real estate through foreign corporations. If you live in a country that has…

IRA distribution to U.S. citizen living in Switzerland – which country taxes it?

U.S. tax law says that a U.S. citizen — no matter where he/she lives — will be taxable on worldwide income. But if you’re a U.S. citizen living in Switzerland you’re taxable as a resident there. Both country wants to tax you. Which country gets first crack at you when you take a distribution from…