Part 1
Introduction
Overview
Condominium

Part  2
Type of Purchase
Questions & Answers

Part  3
Financing
Bank Requirements

Part 4
Using a Broker
Broker Agreement

Part 5
Purchase Contract

Part 6
Purchase process

Part 7
Cost of Purchase

Part 8
Time to Close

 

Depending upon the type of income the property produces and the manner in which the initial purchase is structured, the foreign investor may be subject to United States taxation on the regular income produced by the property. Home country inheritance laws may prohibit bequests of foreign real property in the manner you wish. The inheritance tax laws may impose additional levies upon the ownership of foreign real property. Equally important, the tax laws of the United States has pitfalls for foreign property owners that may be avoided with proper structuring of the purchase. Without a proper structure, the foreign purchaser may subject himself to United States income tax or inheritance taxes without ever realizing that he is doing so until it is too late. It is impossible to provide one structure which would work for everyone, since the tax laws of each purchaser' s home country vary, as do the individual situations of each purchaser. Many purchasers are able to create corporate structures which do much to shelter their property from home country inheritance taxes. "Fleeing Trusts" are another popular entity which is useful in other instances. What method you use will depend on your particular personal and financial situation. 

 Questions and Answers

A foreign purchaser's acquisition of real estate, whether for use as a residence or for investment purposes, should be planned carefully to provide safety and to minimize taxation. Among the things to consider are: 

Q. If I will use the property solely as a personal residence, should I purchase it in my own name? 

A: If you are purchasing property solely for use as a personal residence, it is possible to purchase it in your personal name. Even for residences, many people prefer to use a corporation, a limited liability company, a partnership, or other entity to purchase property. Although issues of liability normally do not arise in connection with the ownership of a personal residence, use of corporations and other entities to own residences allows greater flexibility in transferring ownership interests to family members and may provide some advantages for estate planning purposes in the purchaser's home country, as well as in minimizing United States taxation. 

Q: If I am purchasing investment property such as rental apartments, warehouses, or other commercial property, what problems can arise? 

A: Investment property, almost without exception, should be purchased through the use of a corporation or other entity. Use of one or more corporations provides several advantages, although careful tax planning is necessary if you will receive regular income from the property in order to avoid being considered as "doing business" within the United States. By owning property in a corporation or other entity, you: 

• Shield yourself from liability if someone should suffer an injury at the property.
• Consolidate all of the income and expenses attributable to the property within a single entity, thereby providing tax advantages for both the income and eventual sale of the property.
• Provide flexibility for tax planning, both in terms of transferring interests in the property to family members and others, and home country estate planning.

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