I am non US resident and looking to make some long term real estate investments across the US, probably in California, Pensilvania, Michigan and maybe Florida. Since I am doing things from abroad I am in need of some help locally and also considering crowdfunding projects.
I wonder in which state it is most advantegous to incorporate the main LLC and if you have some recommendations for attorneys that can help me manage my investments in the US.
You should generally create your entity in the state where the properties are located. If you don't, you'll have to register the LLC as a "foreign entity", which usually involves exactly the same costs as creating one locally.
Jon Holdman, Flying Phoenix LLC
@Daniel Fuchs I have a foreign account specialist that may be able to assist you in setting up a company. I use her for my stuff and has done a good job so far. Her rates are also pretty good. PM and I will forward her information.
@Daniel Fuchs We've done this for a handful of international clients who invested on our crowdfunding website. Best to work with a legal and accounting firm that specializes in this - happy to give you a few names to call on. Once you create your entity, you get a tax ID number and then you can invest as if you were a US citizen. You'll need your firm to file taxes on behalf of the entity annually.
@Daniel Fuchs As a CPA who works with non-resident real estate investors, there are a few things you need to consider:
1) You need to consider the best entity structure for any real estate investments. This includes determining whether their interest is held individually or through an entity like an LLC or corporation.
2) Even if you don't have a tax liability, you will generally be required to file a U.S. tax return in addition to a state return in many cases.
3) If title is being held individually (or through an LLC as a disregarded entity), you need an Individual Taxpayer Identification Number ("ITIN"). This is a tax processing number that is issued by the IRS.
4) If you do not reside in the U.S. at all you will typically only be taxed on U.S. source income. But if you decide to reside in the U.S. for extended periods you can find yourself being taxed on worldwide income.
5) Income is subject to U.S. foreign withholding requirements unless an exception is obtained. Many states also have withholding requirements as well so this can be a little tricky. This just means that an estimated tax will be withheld by the partnership, remitted to the IRS or state, and will be credited to you when you file your tax return.
6) In addition to federal tax issues, investors must also consider U.S. estate and gift taxes. This is often overlooked by investors.
7) The U.S. tax code establishes certain “default” rules for non-residents. But the U.S. has established tax treaties with many countries that can alter the default tax treatment.
Each investor situation is different. Before you make your first investment, make sure that you engage a CPA and attorney who understand real estate investment in the US by non-residents.
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