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Abstract: 

While it is true that foreign investors in U.S. real estate or mortgage debt face U.S. income taxes, estate and gift tax exposure, and some state and local taxes, the tax code offers a number of special provisions that provide tax relief to foreign citizens or entities who invest in the United States, and every advisor serving foreign clients should understand and use these provisions to full advantage. In fact, with careful planning foreign investors can limit or possibly avoid U.S. tax liability altogether, even after the Foreign Investment in Real Property Tax Act. This article provides an overview of the applicable tax law and then outlines a number of acquisition structures that may materially improve a foreign investor’s post-tax return from investment in the U.S.

Keywords: U.S. real property holding corporation, USRPHC, Foreign Investment in Real Property Tax Act, FIRPTA, Foreign Account Tax Compliance Act FATCA, foreign investment, U.S. tax, resident, substantial presence test, withholding obligations

Affiliations:  1: Ruchelman P.L.L.C..