Tax Considerations of Foreign Individual Investors in U.S. Real Estate Investment
Mertens - Law of Federal Income Tax - Developments & Highlights, August 2014
24 Pages Posted: 26 Jan 2016 Last revised: 9 Mar 2017
Date Written: August 1, 2014
The global economic crisis caused residential home prices in the United States to plummet from 2006-2010. This, combined with a relatively weak U.S. currency, created a perfect storm for foreign investors to enter the U.S. residential real estate market. Foreign investors need to be educated by their tax advisor about the general tax considerations applicable fore real estate, the withholding ta applicable to foreign investors' real estate investment (FIRPTA) upon disposition, and the estate tax.
This Highlight will first present the landscape of foreign investment in the U.S. real estate market over the past seven years, contrasting Canadian and Chinese real estate investors. Secondly, this Highlight will discuss the general tax considerations for real estate investment, and the Code provisions attaching thereto. In the remaining parts, the foreign real estate investor specific concerns regarding FIRPTA and the U.S. estate tax, with common planning opportunities, will be reviewed.
JEL Classification: H24, K34
Suggested Citation: Suggested Citation