Questions on Investing from Abroad as a Foreigner in MD

Foreigners Buying in the USA
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Questions on Investing from Abroad as a Foreigner in MD

Pablo P.
Member since 2021 · 10 posts · 3 votes

Hi all, 

I have some basic questions with regard to start investing in US (MD) real estate as a non-US citizen from abroad. My budget is around 150k and I like to start in Baltimore buying a property for long term rental.I would be interested in hearing from those that have already had an experience using a CPA with experience creating tax structures for buying property as non resident in Maryland. 

1. In order to create an LLC, should I get an ITIN or EIN Number? how long it takes to get? If I plan to travel there to choose the property should I get all these and bank account opened in advance? can it be done online?

2. Any experience working with a CPA that build the tax structure for foreigners buying real estate in MD? What are the tax implications? Is there anything else apart from income tax, inheritance tax and 10% withholding tax?

Thanks in advance!

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
5y

@Natalie Kolodij or @Linda Weygant could probably speak to the tax issues.

As for investing in Baltimore from out of the area, dont do that. 

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    5y

    @Natalie Kolodij or @Linda Weygant could probably speak to the tax issues.

    As for investing in Baltimore from out of the area, dont do that. 

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
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  • Kai Kopsch
    Real Estate Broker · Charlotte, NC · Member since 2016 · 569 posts · 351 votes
    5y

    I would start with hiring a local Real Estate Agent that is familiar to work with foreign nationals. You can create an LLC online or over a Law company and you can apply for an EIN online. Takes just a few days. With the Company documents, your passport, and EIN you can open a bank in person in the US.

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  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    5y

    My first thought....when you say Baltimore and MD....be very very very careful with that.  There is opportunity, but not easy.   You may be the exception to the rule....but places like Baltimore are fore the very experienced and likely local experts.   It's hard enough making money when you are local, but I see all your money disappearing when you try to do it from abroad.

    Also be very familiar with FIRTA.   That can create some issues for international investors.  Probably less so if you are long term buy and hold vs flipping.   You may even want a FIRTA consultant to assist you navigating the process.

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  • Pablo P.
    OP
    Member since 2021 · 10 posts · 3 votes
    5y

    @Bruce Lynn Hi bruce, thanks for your message. Let me ask you why Baltimore it is said to be a complicated market: you mean because there are particular property laws in MD? more regulations for rental properties? or what other reasons would make it such a tricky market?

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  • Charles Carillo
    Rental Property Investor · North Palm Beach, FL · Member since 2018 · 2k+ posts · 1k+ votes
    5y

    @Pablo P.

    We work with a number of foreign investors and if you are looking for any professionals (accountants, attorneys, lenders) that work with foreign investors DM ME and I will send you a list of the ones our partners have used.

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  • Ozzy SirimsiBusiness Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
    5y

    I usually help my Turkish investors to invest in Baltimore, with 150K budget you are fine. There is no horror story around that number in Baltimore.

    Getting a EIN or ITIN should take 2 weeks , not sure about corona times, it might be longer.

    I think withouldings are %7.5 for MD and %7.5. They just hold it until you complete your tax returns etc. 

    Be aware many accountants are not familiar with Firpta laws and conditions, so find somebody who did it before, could be expensive, they charge good amount of money to file that.

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  • Sebastien Hitier
    Rental Property Investor · Hong Kong, Hong Kong Island · Member since 2014 · 188 posts · 114 votes
    5y

    Hi @Pablo P. I invest from abroad too, 

    Many Americans own a single house do not setup a LLC for a single property, unless the property is in a high risk area. There comes a time if you own many houses, that owning them through a LLC might help mitigate legal risk.

    LLC can either be disregarded for tax purpose, which means that in general you will elect to file for tax and get taxed on net income as US persons are (with minor differences on exemptions/deductions). The alternative is to get the LLC taxed as a corporation which is less common because it is less advantageous.

    The case for non US persons is more unusual for CPA, and I believe that the most economic setup for a LLC for tax if at all depends on which country you are resident. Compared to US persons, there are additional filing requirements on foreign-owned LLC since 2016, and the death tax starts above 60k instead of above 11m.

    I am definitely not a CPA, but I guess you need to know what the questions are to determine if a CPA is right for you.

    You can DM me to discuss your project.

    1Reply
  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    5y

    @Pablo P.   Baltimore is probably one of the few cities in the US that has blocks and blocks and blocks of abandoned homes.  There are certainly very nice areas that are great places to live, and there are places no one probably wants to live.  Sometimes pricing can look deceiving.   There are probably more big issues of crime, drugs, turf wars, segregation, poverty, and other issues than most other cities in the US.  Something like 17,000 abandoned buildings there.

    https://www.politico.com/news/...

    I think you can find opportunity in every market and in most situations, but not easy to do as a local, even tougher if you are not local or here.

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  • Pablo P.
    OP
    Member since 2021 · 10 posts · 3 votes
    5y

    @Ozzy Sirimsi Do you have any contact from accountants that are familiar with Firpta laws? or any suggestion on where to look for one to ask for a quote?

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  • Ozzy SirimsiBusiness Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
    5y

    I work with a guy name Jerome something ( I dont remember his last name) from DC, not sure if I can put his number here or not, send me pm, can give you his number. @Pablo P.

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