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Leveraged Blockers for Foreign Investors: Tax Implications

U.S. Nonresident Taxation, Structuring Considerations, Weighing Tax Consequences, Alternative Investments

Note: CLE credit is not offered on this program

A live 110-minute CPE webinar with interactive Q&A

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Thursday, August 29, 2024

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

Early Registration Discount Deadline, Friday, August 2, 2024

or call 1-800-926-7926

This webinar will discuss how a leveraged blocker corporation can maximize net returns to non-U.S. investors and minimize U.S. reporting requirements. Our panel of global structuring experts will review the benefits of leveraged blockers, calculating the tax benefits, and alternative structures that international tax advisers should sometimes consider.

Description

Foreign investors in U.S. real estate are subject to stiff taxes and reporting requirements. The Foreign Investment in Real Property Tax Act (FIRPTA) requires nonresident withholding of 15 percent on the sales price of U.S. property, rather than the net gain, and nonresidents must file U.S. returns to recoup the over-withheld taxes. Additionally, 30 percent withholding is required on rental income. Using a U.S.-based blocker corporation can help certain investors circumvent these harsh tax consequences.

Acquiring real estate investments through a U.S. corporation, a leveraged blocker, allows nonresidents to acquire real estate interest through a U.S. entity. These entities can ease the burden of higher tax rates and onerous filing obligations required of foreign investors. However, leverage blockers may not be the best choice for all scenarios and the relative transactions between the corporation and the investor must be arms-length. Applicable tax rates, including state and local taxes, should be be considered and calculated. Tax practitioners working with foreign investors must weigh the pros and cons based on each foreign investor's tax situation.

Listen as our panel of international tax management experts explains how nonresident investors in the U.S. can utilize leverage blockers to minimize U.S. filing and payment obligations.

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Outline

  1. Leveraged blockers: introduction
  2. U.S. taxation of nonresident investors
  3. Benefits of leveraged blockers
  4. Structuring a leveraged blocker corporation
  5. Transfer pricing analysis
  6. Caveats and other considerations
  7. Alternative investment options

Benefits

The panel will review these and other critical issues:

  • U.S. taxation of nonresidents
  • Foreign investors and situations that are ideal candidates for leveraged blockers
  • Alternative investment options when a leveraged blocker corporation is not ideal
  • Weighing the benefits and caveats of a leveraged blocker structure for specific foreign investors

Faculty

Freedman, Jay
Jay Freedman

Principal
KPMG

Mr. Freedman is a principal in KPMG LLP’s Financial Services Tax practice. For more than 20 years, he has focused...  |  Read More

Additional faculty
to be announced.
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