30% withholding tax for foreign investor.

[James Sreewarom]

Hello.

I have a foreign friend who is interested in invest in rental property, but there is one concern that he has to pay 30% withholding tax. We agree that I will be a manager for finding good deal since I know the market well. We agreed that he would give 5% of whatever it left from property manager company to me. Base on this circumstance, what kind of set up I should do? And is there anyway to avoid that 30% withholding tax for foreign rental? Right now, I'm investing in Las Vegas. I don't mind paying attorney or CPA, but I want to make sure there is a way to avoid that 30% tax first

Thank you very much. 

[Brandon Hall]

@Steven Hamilton II @James Sreewarom

The 30% withholding can be avoiding by making the election to treat the rental as effectively connected to a US trade or business.

https://www.irs.gov/Individuals/International-Taxpayers/Foreign-Persons-Receiving-Rental-Income-from-U.S.-Real-Property