Foreign Investment in U.S. Real Estate: Impact of Tax Reform

Entity Selection, FIRPTA, Tax Concerns When Acquiring or Disposing of Ownership Interests

Recording of a 90-minute CLE webinar with Q&A


Conducted on Thursday, May 17, 2018

Recorded event now available

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Program Materials

This CLE webinar will examine tax challenges for foreign investors in U.S. real estate. The panel will discuss the impact of recent tax reform on blocker corporations and other investment vehicles, new IRS reporting obligations, the Base Erosion Anti Abuse Tax (BEAT), and other matters.

Description

The U.S. tax rules governing investment in U.S. real estate by foreign nationals are intricate, and the new tax law made significant changes for foreign investors. Counsel must be conversant with existing tax law as well as the new rules impacting foreign investment.

FIRPTA taxes foreign individuals and corporations on their dispositions of U.S. real property interests. Tax treatment varies with the form of ownership. The reduction of the corporate tax rate from 35% to 21% will influence the choice of investment vehicle, as will new carried interest rules, new NOL limitations, limitations on interest expense, and depreciation.

In the typical corporate structure, foreign investors contribute capital to a foreign corporation in a non-tax jurisdiction, which then provides the capital to a wholly owned blocker corporation. The BEAT tax, which applies to interest payments made or accrued by the blocker corporation to the related foreign party lender, will also affect foreign investment structuring.

Listen as our authoritative panel discusses critical tax considerations and tactics for counsel to foreign investors buying, holding and disposing of U.S. real estate.

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Outline

  1. Overview of tax rules that apply to foreign investors in U.S. real estate
    1. Income
    2. Withholding
    3. FIRPTA
    4. Estate and gift tax
  2. Investment structure alternatives and their tax consequences
    1. Individual ownership
    2. Ownership through U.S. LLC
    3. Ownership through a foreign corporation
    4. Ownership through U.S. corporation
    5. Ownership through trusts

Benefits

The panel will review these and other crucial issues:

  • What are the tax implications of purchasing U.S. real estate individually vs. through an LLC vs. a blocker corporation or a trust?
  • What are the tax reporting obligations for non-U.S. owners of U.S. real estate?
  • How does FIRPTA compliance vary between different ownership structures?
  • How might the new tax law impact approaches to foreign investment in U.S. real estate?

Faculty

Hannon, Edward
Edward J. Hannon

Partner
Quarles and Brady

Mr. Hannon regularly works with institutional investors, high-net-worth individuals, and real estate companies in...  |  Read More

Hassan, Cecilia
Cecilia (Ceci) Hassan

Partner
Baker & McKenzie

Ms. Hassan is a member of the firm's Tax Practice Group, and Global Wealth Management sub-practice group. Her...  |  Read More

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CLE On-Demand Video

48 hours after event

$297

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48 hours after event

$297