If you are a resident alien you are subject to the same US income and estate taxes as US citizens; if you are a non-resident alien holding investment properties, missteps can lead to unwelcome US tax consequences….
From a US taxation perspective, one of the more complicated situations faced by US citizens and non-resident aliens is the treatment of the real estate holdings and investments they have in the US.
There are ways to reduce or even eliminate certain taxes with the right strategies, plans and structures.
Residency Status Affects Real Property Tax Strategies and Planning
The first step in understanding your US tax obligations relative to your real property investments in the US is to understand your residency status. Simply stated, if you are a US tax resident for income and estate tax purposes, you are subject to a US tax on your worldwide income and estate, gift, and taxation on your worldwide assets. Determining residency (domiciles) for US gift and estate tax purposes
is different than determining US income tax residence.
If you are a non-resident alien, your situation is more complicated. While US residents are taxed on worldwide income on all the income and assets they possess regardless of location, when it comes to real property investments, non-residents are subject to taxation only on real property interests they own (USRPIs).
What are different levels of taxation that non-residents need to discuss with their tax advisor? What are the tax strategies and planning opportunities for non-residents to consider to minimize those taxes? Download our complimentary eBook, 6 Overlooked (and Troublesome) US Tax Obligations for Expats, for the answers to these questions and more.