All Forum Posts by: Paul Sundin

@David Thompson . You are correct that getting an ITIN can be cumbersome.  Investors may want to see if their tax professional is an IRS acceptance agent which can greatly expedite the ITIN process. An acceptance Aaent is a person or an entity (business or organization) who has a written agreement with the IRS and is authorized to assist foreigners who do not qualify for a Social Security Number but who still need an ITIN. The agent facilitates the application process by reviewing the necessary documents and forwarding the completed forms to IRS.

Daniella Goldstein

Is this property still available?

Daniella Goldstein

I need a condo or townhouse in Tempe, AZ.  Prefer a 2 bd / 2ba but will consider 1 bedroom.  Will take either rented or vacant.  Let me know if you have anything.

@Javier Gaillard

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.

@ Guillermo Beraun

Sebastien Hitier

Sebastien Hitier

There will often be a tax withholding called FIRPTA. FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests. It requires a buyer of real estate to withhold generally 15% of the gross sales price (subject to certain exceptions and exclusions) and remit the funds to the Internal Revenue Service if the seller is a “foreign person.”

But realize this is just a withholding.  You will typically file a tax return and the withholding will be applied to anything that you owe.  Make sure to discuss with a CPA who is knowlegeble on these issues.

@Michael Wentzel

That is a good list to start with.  From a tax standpoint, 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. Some of these issues are rather straightforward, but depending on your tax situation there may be entity structures that you can implement that can make the investments more effective and tax efficient.

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%.  The US tax code also has a very favorable long-term capital gains rate of 15% (subject to certain income) that may apply upon the sale or disposition of the property.

In addition to federal taxes, investors will also have state taxes to consider. The US has of course 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.  Navigating state tax law and filing the applicable tax returns is certainly not easy.

@Farhad Shir

The buyers should not resist signing an affidavit assuming it is complete and accurate.  Please realize that it is just a withholding.  Once you file a U.S. tax return, this will be applied against the tax you owe (if any).  So depending on what you owe, you may be a large portion of this back.  You just have to review the situation with your accountant to make sure that you are OK.

@Brian Adams

From one CPA to another, congrats on your success!

As a CPA who works primarily in real estate, I also see tax returns with plenty of money being made.  There are so many different strategies to making money in real estate it is nice to have the visibility that we have.  Thanks for sharing!

@Salvador G.

The S-Corp fee sounds reasonable, but the other fees seem high.  But I agree that you need to consider the level of service you are receiving during the year.  If the CPA is providing a lot of tax structure advice and tax planning then it may be worth.

If you don't feel you are getting service that is consistent with the fees then I would check around and interview a few other CPAs to find one that you think is a fit.  In any case, I would not use turbo tax for an 1120s and that many rentals.  I have just seen too many people get into trouble.

@Bryan Hancock

This is a tough one to answer.  The main reason is because most small to mid-size CPA firms are essentially tax firms and do not do audits.  My firm, for example, does not do audits because the risk is just too high plus there is much higher compliance on my end so it is just not worth it.  But in many situations, companies do not need audits they can get a "review" or "compilation" which are much cheaper and much less risky for CPA firms.

To answer your question, if someone were to propose this to me I would probably try to do some sort of flat rate pricing with some small variably depending on the documentation, journal entries, etc.  But I would still assume that you'd be looking at a fee of a few grand each minimum.