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

See all articles by David Herzig

David Herzig

Ernst & Young; Valparaiso University Law School

William Byrnes

Texas A&M University School of Law

Kris Odegard

Independent

Date Written: August 1, 2014

Abstract

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

Herzig, David and Byrnes, IV, William H. and Odegard, Kris, Tax Considerations of Foreign Individual Investors in U.S. Real Estate Investment (August 1, 2014). Mertens - Law of Federal Income Tax - Developments & Highlights, August 2014. Available at SSRN: https://ssrn.com/abstract=2722127

David Herzig

Ernst & Young ( email )

710 Bausch and Lomb Pl
Rochester, NY 14604
United States

Valparaiso University Law School ( email )

656 S. Greenwich St.
Valparaiso, IN 46383-6493
United States
219-465-7809 (Phone)
219-465-7872 (Fax)

HOME PAGE: http://www.valpo.edu/law

William H. Byrnes, IV (Contact Author)

Texas A&M University School of Law ( email )

1515 Commerce St.
Fort Worth, TX Texas 76102
United States
(817) 212-3969 (Phone)

HOME PAGE: http://www.linkedin.com/in/williambyrnes/

Kris Odegard

Independent ( email )

No Address Available

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