Structuring Foreign Investment in U.S. Real Estate: Entity Selection and Transaction Structures
FIRPTA, Determining Individual vs. Entity Ownership Structures, Achieving Optimal Tax Treatment
Recording of a 90-minute premium CLE/CPE video webinar with Q&A
This CLE/CPE course will provide tax counsel with a thorough and practical guide to structuring strategies and tax considerations for foreign investors in U.S. real estate. The panel will outline best practices for determining the purchasing entity and review tax planning opportunities in structuring the deal.
Outline
- Persons subject to U.S. taxation
- U.S. citizens and residents
- Nonresident aliens
- U.S. corporations
- Foreign corporations
- Domestic U.S. trusts
- Foreign trusts
- U.S. taxation of foreign persons
- U.S. income taxation
- U.S. estate tax
- U.S. gift tax
- Special rules under Foreign Investment in Real Property Tax Act (“FIRPTA”)
- Gain from sale of U.S. Real Property Interests (“USRPIs”) by foreign investors treated as business income
- The definition of USRPIs is very broad
- 15% withholding tax applies to gross proceeds from the sale
- Exceptions to FIRPTA
- Special Considerations
- Advantages and disadvantages of alternative investment structures
- Individual ownership
- Ownership by U.S. LLC
- Ownership by U.S. corporation
- Ownership by foreign corporation
- Ownership by U.S. subsidiary of a foreign corporation
- Ownership by foreign trust
- Tax strategies
- 1031 exchange
- Portfolio interest
- REIT structures
- Shared equity mortgage
- Exceptions to FIRPTA
- International tax treaties
Benefits
The panel will review these and other key issues:
- What is the definition of “U.S. Real Property Interest” and why is that relevant?
- What are the various tax consequences of a foreign person owning U.S. real estate in an individual capacity?
- What is the impact of blocker corporations and other intermediary entities on the tax treatment of foreign investment in U.S. real estate?
- How to avoid excessive withholding tax upon a sale of U.S. real property interests.
- What is the impact of tax reform on U.S. real estate investments by foreign entities?
Faculty
Richard S. LeVine
Special Counsel
Withersworldwide
Mr. LeVine's practice focuses on cross-border estate, gift and income tax planning for owners of privately held... | Read More
Mr. LeVine's practice focuses on cross-border estate, gift and income tax planning for owners of privately held companies and other high-net-worth U.S. and foreign individuals. He counsels clients on pre-immigration and pre-expatriation tax planning, offshore trusts and foundations deferred compensation planning for fund manager and structures involving life insurance. He has been heavily involved in advising clients on the IRS Voluntary Disclosure programs.
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Angela W. Yu
Partner
KPMG US
Ms. Yu has extensive experience providing integrated cross-border tax advice to clients. Her expertise includes FIRPTA... | Read More
Ms. Yu has extensive experience providing integrated cross-border tax advice to clients. Her expertise includes FIRPTA planning, income tax treaty interpretations, structuring investments/acquisitions using REITs, corporate restructurings, evaluating financing options and repatriation strategies, and outbound tax planning. Ms. Yu has represented clients in negotiations with the U.S. Competent Authority and the IRS on various matters.She is a frequent speaker and lecturer on international tax issues and has addressed many professional organizations including the ABA, IFA, TEI and the IRS.
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