All Forum Posts by: Alejandro Riera

Thanks, @Ronald Rohde and @Daniel Hyman.

I’ll be in touch with both of you.

Hi, members of BiggerPockets. I would appreciate if someone can refer me a real estate experienced attorney and CPA in Dallas, TX. I am starting a flipping business and need to establish a company and plan the accounting and tax issues. I'll be in Dallas between 01/18 and 01/23, so it would be very convenient to meet the attorney and the CPA those days. Thanks in advance for your help.

Originally posted by @Nicholas Aiola:

@Alejandro Riera It depends on the ownership of the LLC. If it's a single-member LLC wholly owned by a foreign person, it's treated as a disregarded entity and FIRPTA withholding would still apply. If the LLC has more than one owner, the FIRPTA withholding rules would not apply (there may be other withholding requirements at the LLC level, however).

Thanks a lot for your answer, @Nicholas Aiola. I read about what you said in some IRS published documents and I think you are correct. 

Anyway I would like to have a meeting with an RE experienced CPA in the DFW area as my wife and I want to continue our investing over there. I plan to establish a new LLC with all the issues covered, so we can follow our plan on flipping houses.

We actually live in Caracas but plan to do do bussiness in the US.

Thanks again.

Tom and Lance. Happy new year!

Thanks for your inputs with this issue.

Tom, I read what you send me and it has many answer to my inquiry. I complemented it looking for more documents at the IRS site with Lance’s words and it was extremely helpful.

Indeed, a multimember LLC can select how to be taxed sending a form to the IRS and, If taxed as a partnership or corporation, not be subject to FIRPTA because it is not a flow through entity (for this tax withholding purpose ) anymore.

Anyway, I want to have a meeting with a real estate experienced CPA in the DFW area in order to clarify any details and establish an LLC with everything covered. At the moment I am in Miami visiting my daughter but on the 18th I'll be visiting my son in Dallas, where my wife and I would like to continue our RE investing in flipping houses.

Thanks a lot.

Alejandro

Thank you, @Tom Gimer.

For sure I'll read it.

Hopefully it has the answers.

Hi, @Nicholas Aiola. 

First of all, many thanks for what you are doing answering all these questions and doubts. Great job!!

My questions is : 

Does an LLC created in the United States under the law of the U.S. and the any state, whose managers/members are foreign individuals, is subject to the FIRTPA withholding when selling a U.S. real estate property ?

Having read the IRS 26 U.S. Code § 7701 - Definitions, my understanding is that the answer is NO, but maybe I am wrong.

As the actual rate of withholding is 15% of the sales price, and as the refund (if any) would be "within 90 days" after sending the form, it can be a major setback for my company´s flipping cash-flow because 15% is way higher than the taxable income (and of course than the tax itself), so we would be in the necessity of capital injections to flip the next properties.

Thanks in advance

Alejandro

Hi everybody.

I have a question on the tax/legal side here.

Does an LLC created in the United States under the law of the U.S. and the any state, whose managers/members are foreign individuals, is subject to the FIRTPA withholding when selling a U.S. real estate property ?

Having read the IRS 26 U.S. Code § 7701 - Definitions, my understanding is that the answer is NO, but maybe I am wrong.

As the actual rate of withholding is 15% of the sales price, and as the refund (if any) would be "within 90 days", it can be a major setback for my company´s flipping cash-flow because 15% is way higher than the taxable income (and of course than the tax itself), so we would be in the necessity of capital injections to flip the next properties.

If any of you have comments on this, it would be very helpful.

Thanks in advance

Hi, @Saeid Safarmehdi . Here are my views, as a foreign RE investor as well. Foreign people in the USA are subjects of an IRS tax withholding when selling, via the buyer of your property. The buyer, or his/her title agent has the obligation to retain this money, around 15% of the gross sale price, depending on the price, and to report it to the IRS. You can apply to the IRS, prior to the sale but after signing the contract, for a reimbursement of the withholding amount or part of it in a very short time via a form filled by your CPA and signed by you. But be aware that, depending on your numbers for the deal, the withholding could be more than your profit. So plan accordingly and, above all, seek the professional advice of a CPA and a lawyer versed in Real Estate matters.

@Jose Godoy, how is it going with your RE plans? Have you made your first aquisition? I am interested in hearing your experiences, as I am in the very same path.

@Jose Godoy, how is it going with your RE plans? Have you made your first aquisition? I am interested in hearing your experiences, as I am in the very same path.