should be listed as the buyer on the sales contract?
The U.S. real property of a non-resident
alien who dies while holding title in his or her name or jointly with someone else is
subject to U.S. estate tax.
Did you know . . . . .
Non-resident aliens are subject to U.S. estate and gift tax rules that are
from those applied to U.S. citizens and residents.
The federal estate tax provides an exemption
equivalent of only $60,000 for non-resident aliens as compared to $600,000 for residents
Marital deduction is available only if the surviving
spouse is a U.S. citizen or if the property is transferred to what is known as a qualified
If the real estate was held in the individual name
of a foreign investor who is a non-resident alien, a probate proceeding may be required in
order to convey proper title from the estate.
Gifts of U.S. real property by non-resident aliens
are subject to U.S. gift tax.
Is the rental income taxable from
the foreign investor?
Both rental income from real property
located in the United States and the gain from its sale will always be U.S. source
income subject to tax in the United States regardless of the foreign investors status and
regardless of whether the United States has an income treaty with the foreign investors
The method by which rental income is taxed
depends on whether or not the foreign investor is considered to be "engaged in a U.S.
trade or business".
If it consists of merely passive activity such as
a net lease which provides for the lessee to pay rent, as well as all the
other operating expenses, the rental income is subject to a flat 30 percent withholding
tax (unless reduced by an applicable income tax treaty) applied to the gross income rather
than the "net rent" received.
If, on the other hand, the foreign investor is
engaged in a U.S. trade or business such as the development, management, or operation of a
major shopping center, the rental income will be subject to withholding and will be taxed
at ordinary progressive rates.
What should you look for in a Real
One who understands all of the substantive issues
of law and tax.
One who explains all of the aspects of investing
in U.S. real estate.
One who has a proven track record with other
One who has valuable contacts who
routinely deal with foreign investors in such areas as Mortgage Lending, Title
Companies, Closing Agents, Rental Management Companies, and Attorneys who are familiar
with International Real Estate Law.
One who offers comprehensive research on
the proposed property and market.
One who aggressively markets your property, for
the greatest exposure possible, in a variety of mediums such as newspaper ads, full color
catalogs, toll free property hotlines that offer listeners audio brochures, and
comprehensive web sites.