Yaghouti Rohrberg Team

Buy, Rent, Live!

FacebookButton TwitterButton

bannermod

Real Estate Taxes

Foreigners are not exempt from Real Estate Taxes

 

Taxes when holding as investment

The current tax rate is a flat 30% on the net rental income (unless reduced by an applicable income <ahref="http://www.irs.gov/businesses/small/international/article/0,,id=96454,00.html">tax treaty).

If the foreign holder is engaged in an active business or trade within the US the IRS will use progressive rates. Subletting a single apartment is not considered an active business.

More infohttp://www.irs.gov/businesses/small/international/article/0,,id=129631,00.html

 

Foreign Sellers Tax implications

If selling a house FIRPTA authorizes the US to charge tax on the disposition of Real Estate interest. The US buyer of such Real Estate has to withhold 10% of the amount realized on the disposition. The US buyer can be liable for the 10% if he/she forgets to withhold this amount.

Note that the 10% withholding is not the amount of tax actually due. It is simply an advance payment made at closing, and applied toward the foreign seller’s U.S income tax obligation arising from the sale of the U.S. property. Therefore you must file a income tax return in the year the property was sold.

The seller must obtain a Tax ID Number in order to meet seller’s obligations to the IRS. 

More info on http://www.irs.gov/businesses/small/international/article/0,,id=105000,00.html

New York State withholds almost 6.85% of the proceeds. 

California has the following rates

The withholding rate is 31/3 percent of the total sale price, or an optional gain on sale withholding based on the maximum tax rate on the gain on sale as follows:

  • 9.3 percent for individuals.
  • 8.84 percent for corporations.
  • 10.84 percent for banks and financial corporations.
  • 1.5 percent for S corporations.
  • 3.5 percent for financial S corporations

For more information <ahref="https://www.ftb.ca.gov/forms/misc/1016.pdf">https://www.ftb.ca.gov/forms/misc/1016.pdf 


Capital Gain Tax

Consider a 1031 exchange

If the exchange qualifies under U.S. law , it gives the opportunity to not pay taxes and no FIRPTA income or withholding tax will be due on the transaction. 

More info <ahref="http://www.irs.gov/businesses/small/industries/article/0,,id=98491,00.html">http://www.irs.gov/businesses/small/industries/article/0,,id=98491,00.html

Above information is subject to change and we do not guarantee accuracy. We strongly advise you to check with a local accountant.

Thanks To

JOOMLA

JOOMLART

Luis Villamarin

Mo.Y.

Contact us

Adress:Urban Living Licensed Real Estate Broker, 1178 Broadway, 2nd Floor, New York, NY 10001 USA

Phone:

from the USA +1 (917) 294 1298

from Germany +49 (0) 371 33 71 79 14


Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

About us

Roman and Negin Yaghouti Rohrberg

We are a team which understands the local market of New York and want to make your private real estate investment purchase a success. Read more ...