Rental Property Investor · Detroit, MI · Member since 2013 · 46 posts · 19 votes
As a foreigner what is the tax rate for renting property? Is there a State and Federal income tax? I know some states don't charge income tax on rentals, but you still have to pay the Federal income tax.
There are definetely state and federal tax issues to consider. The three main US tax issues that foreign investors need to be aware of are: (1) income tax; (2) estate tax; and (3) gift tax.
For federal taxes, many foreign investors will find themselves being assessed tax at the same rates as US individuals. These rates begin at 10% and go up to the highest rate of 39.6%. Rental real estate will often generate depreciation expense and other direct expenses, so most investors will only pay rates at the lowest level of 10% (if they pay tax at all). The US tax code also has a very favorable long-term capital gains rate of 15% (subject to certain income).
The US has 50 states, but only 43 have a state income tax. But some states impose a transfer tax and other assessments that can complicate the situation.
Make sure you must consult a tax professional who has extensive knowledge of foreign tax issues.
There are definetely state and federal tax issues to consider. The three main US tax issues that foreign investors need to be aware of are: (1) income tax; (2) estate tax; and (3) gift tax.
For federal taxes, many foreign investors will find themselves being assessed tax at the same rates as US individuals. These rates begin at 10% and go up to the highest rate of 39.6%. Rental real estate will often generate depreciation expense and other direct expenses, so most investors will only pay rates at the lowest level of 10% (if they pay tax at all). The US tax code also has a very favorable long-term capital gains rate of 15% (subject to certain income).
The US has 50 states, but only 43 have a state income tax. But some states impose a transfer tax and other assessments that can complicate the situation.
Make sure you must consult a tax professional who has extensive knowledge of foreign tax issues.
I have an international client that is closing on a rental property he is selling. He has to pay 18% in withholdings. Is there anything he can do right now to lower that tax amount? Like show more losses, etc.