How to handle USA taxes when investing from overseas?

6 Replies

I live in the UK, but I am hoping to purchase property in California to rent out as Air BNB. What's a good place to look for tax advice? I want to pay all taxes that are legally due, so I would need advice on how to pay taxes in USA.

I also know that governments often have incentives to allow one to legally minimise tax, so I would like advice on this too.

I've tried contacting various tax specialists in the area where I am planning to purchase property but none of them deal with international customers. Any ideas?

Please note: I want to 100% pay all tax that is legally due, so I don't want any schemes that avoid this or involve breaking the law.

You might also look for a UK practitioner that does individual inbound work (into the US). Typically many EU countries (to include the UK) have tax professionals that are very fluent in US Taxation and/or have US affiliations that they can tap to assist as necessary.

@Catherine Underwood

You will need to work with a cross border tax specialist. With the investment in CA, you will need to file a federal tax return (Form 1040NR) and a CA return. There will also be an important election to discuss regarding effectively connected income and so forth.

Be sure your CPA/Accountant is knowledgeable in this area. Hope this helps.

@Christopher Smith @Lance Lvovsky Is there a particular term for a tax specialist who deals cross border? 

Originally posted by @Catherine Underwood :

@Christopher Smith @Lance Lvovsky Is there a particular term for a tax specialist who deals cross border? 

I've been referred to generically by my firms as both a Global and International tax specialist. However, my work was mostly US outbound focused for large national office corporate clients.

The folks who did individual work were sometimes housed in the Expatriate group. You should probably target a mid sized firm, one with enough depth to be able to address cross border tax issues, but yet has reasonable billing rates. 

@Catherine Underwood

There is no universal word. You just need to find a CPA that does this kind of work. Look around the forums to see who does cross border tax consulting and compliance.

@Catherine Underwood

From my experience of a number of years as a non-US RE investor this issue requires a few hoops to jump through but is really not a problem once you are set up.

I would look for a US licensed CPA based in the UK- (This should not be too difficult to find.) The advantage is the ability to meet face to face, exchange documents and possibly liaise with your UK CPA. As far as I know there is a double taxation treaty between the UK and the USA- such that you would be credited on your UK return for any tax paid in the US. You would need to retain their services to submit an annual report to the IRS, a copy of which your UK accountant should receive as well- and there is not much more to it.

You will need a US tax number (called an ITIN) before you will be able to pay taxes- normally the CPA can handle that application as well.

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