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TAX CONCERNS FOR FOREIGN INVESTORS AND U.S. CITIZENS INVESTING ABROAD

TAX CONCERNS FOR FOREIGN INVESTORS AND U.S. CITIZENS INVESTING ABROAD. By THOMAS C. ROBERGE & COMPANY CERTIFIED PUBLIC ACCOUNTANTS U.S. INTERNATIONAL TAX SERVICES Presented Susan Inez Poskus , CPA.

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TAX CONCERNS FOR FOREIGN INVESTORS AND U.S. CITIZENS INVESTING ABROAD

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  1. TAX CONCERNS FOR FOREIGN INVESTORS AND U.S. CITIZENS INVESTING ABROAD By THOMAS C. ROBERGE & COMPANY CERTIFIED PUBLIC ACCOUNTANTS U.S. INTERNATIONAL TAX SERVICES Presented Susan Inez Poskus, CPA ONE BEACH DRIVE SE, SUITE 220 FACSIMILE 727 823-6781 677 NORTH WASHINGTON BOULEVARD ST. PETERSBURG, FLORIDA 33701 Info@RobergeCo.com SARASOTA, FLORIDA 34236 TELEPHONE: 727 822-9393 WWW.ROBERGECO.COM TELEPHONE: 941 952-5848

  2. FOREIGN INVESTOR PURCHASING PROPERTY IN THE U.S. • Before purchasing determine how the property should be titled • Corporation • Foreign Corporation • Higher tax rates • Deemed economic benefit issues in some countries. • Domestic Corporation • Many domestic corporations do not prevent estate tax issues. The IRS can “reach through”. • All corporations have higher filing and annual qualification costs • LLCs – may be a “bad” idea • Titled to Individuals • Individual Tax Identification Number (ITIN) • Estate Taxes are applicable • Multiple persons on title does NOT help • Rental of U.S. Property • 2 Options • Pay 30% of gross rent • Pay tax on income less expenses at graduated tax rates • Must File annual tax returns

  3. FOREIGN INVESTORTRANSFERING PROPERTY IN THE U.S. • What is FIRPTA? (The 10% withholding on the GROSS sales price, required anytime a Foreign person sells real estate) • Definition of Foreign person • Greencard • Other • Obtaining Relief from the 10% withholding • U.S. Person • Withholding certificate • 300,000 rule • Other Types of transfer • Gift • Quit Claim • 1031 Exchange – may not be tax free or deferred in home country • Short Sales • FIRPTA withholding still applies • Reduction in withholding can be requested • Not all short sales result in loss to taxpayer

  4. FOREIGN INVESTORSEstate & Gift Tax Issues • Foreign Investors are treated differently • Florida Spousal Exclusion does NOT apply • U.S. Citizens and U.S. domiciles get $3,500,000. Non residents only get $60,000. • A transfer from a person to a corporation will probably be taxed and could still be subject to estate tax. • Joint ownership does not automatically cut decedent’s US estate in half. • Sale of US Real Estate by Foreign Decedent • Transfer Certificate before closing – required by law • The IRS treats the closing agent as the “statutory executor” in a real estate sale since the funds flow through the closing agents escrow account. • The sale can go thru but funds CANNOT be dispersed to the beneficiaries of the estate until the IRS has “closed” the estate. Usually 12-15 months AFTER the estate return is filed. • SHORT SALE ISSUES

  5. U.S. TAX RESIDENTS & INTERNATIONAL TAX ITEMS • U.S. tax residents (yes there is a difference) are subject to tax on worldwide income, no matter where they live and/or work. This includes: • Earnings paid by foreign corporations for work done outside the U.S. • RENTAL properties outside the U.S. • Any other type of income • Property held by U.S. persons properties held outside the U.S. are taxed almost the same as if they were here in the U.S. • Can be principle residence • Allowed expenses and depreciation if rented to 3rd parties although calculation is a bit different • Special disclosures are required for having foreign bank accounts that exceed in aggregate $10,000 during the calendar year.

  6. TheCompany • Thomas C. Roberge & Company is the only certified public accounting firm in Florida that practices exclusively in the international tax area. The company is dedicated to serving the special needs of foreign nationals investing in the United States and U.S. Citizens residing abroad. It has offices in Sarasota and St. Petersburg. • The firm represents clients from all over the world and the U.S. in structuring the acquisition, operation and disposition of various types of business and real estate. We counsel U.S. individuals planning overseas business operations. One of our new focus areas is pre-immigration tax planning and the benefits that may be obtained. • The firm also provides tax advice to foreign persons for minimizing U.S. income and inheritance taxes and structuring offshore solutions to accomplish these objectives in appropriate circumstances. The firm has a professional staff who provide a full range of tax return preparation and accounting services. • For more than 20 years, the partners at Thomas C. Roberge & Company have worked in the international tax area with many of the Big Four accounting firms. Their work experience spans the globe with assignments in Europe, the Middle East, and Asia dealing with international executives and international corporate personnel on cross border tax issues and transactions.

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