I have friends and relatives outside of US who wants to invest in real estate in US. I am a US citizen with an excellent credit and already own a home in CA. I have been living here for 15 years.
The plan is to bring about 150-200k fund from outside of US and combine it with my 100k to invest in rental properties.
I am looking for guidance on a structure that is:
- Most tax efficient from capital gains
- Most cost effective to maintain the structure
- Allow me to leverage my personal credit
Any guidance is appreciated.
Their nationality matters due to various tax treaties. Canadians investing in the US usually use a LP structure vs LLC. LLC sets them up for a double tax scenario. An international tax specialist would be able to add more.
I think you also want to factor in the compliance burden for your friends/family that is living abroad.
Rental Income from US Properties can generate ECI / FDAP income based on election. Foreign investors with either ECI / FDAP income may require the application of an TIN and a filing of a US tax return.
@Seth Ferguson Thanks for the pointers. The country does have a treaty agreement with US to prevent double taxation so thats good. Can I leverage my personal credit for an LP?
@Basit Siddiqi yes we took this into consideration already. We would get the TIN and submit tax return on the US based sources.