There’s some exciting news for foreign investors due to recent geo-political developments and the emergence of several financial factors. This coalescence of events, has at its core, the major drop in the price of US property, combined with the exodus of capital from Russia and China. Among foreign investors it has suddenly and significantly produced a demand for property in California.
Our research indicates that China alone, spent $22 billion on U.S. housing within the last few 12 months, far more than they spent the year before. Chinese particularly have a good advantage driven by their strong domestic economy, a reliable exchange rate, increased usage of credit and desire for diversification and secure investments.
We can cite several reasons for this rise in demand for Chicago real estate by foreign Investors, but the primary attraction may be the global recognition of the truth that the United States is currently enjoying an economy that is growing in accordance with other developed nations. Couple that growth and stability with the truth that the US has a transparent legal system which creates a straightforward avenue for non-U.S. citizens to invest, and what we have is really a perfect alignment of both timing and financial law… creating prime opportunity! The US also imposes no currency controls, which makes it an easy task to divest, helping to make the prospect of Investment in US Real Estate a lot more attractive.
Here, we provide a couple of facts that’ll be ideal for those considering investment in Real Estate in the US and Califonia in particular. We will need the sometimes difficult language of the topics and attempt to create them an easy task to understand.
This article will touch briefly on a few of the following topics: Taxation of foreign entities and international investors. U.S. trade or businessTaxation of U.S. entities and individuals. Effectively connected income. Non-effectively connected income. Branch Profits Tax. Tax on excess interest. U.S. withholding tax on payments built to the foreign investor. Foreign corporations. Partnerships. Real Estate Investment Trusts. Treaty protection from taxation. Branch Profits Tax Interest income. Business profits. Income from real property. Capitol gains and third-country use of treaties/limitation on benefits.
We will also briefly highlight dispositions of U.S. property investments, including U.S. real property interests, the definition of a U.S. real property holding corporation “USRPHC”, U.S. tax consequences of investing in United States Real Property Interests ” USRPIs” through foreign corporations, Foreign Investment Real Property Tax Act “FIRPTA” withholding and withholding exceptions.
Non-U.S. citizens choose to invest in US property for a variety of reasons and they will have a varied selection of aims and goals. Many will want to insure that all processes are handled quickly, expeditiously and correctly as well as privately and in some cases with complete anonymity. Secondly, the matter of privacy in relation to your investment is incredibly important. With the rise of the web, private information is now more and more public. Although you may well be necessary to reveal information for tax purposes, you are not required, and should not, disclose property ownership for all your world to see. One purpose for privacy is legitimate asset protection from questionable creditor claims or lawsuits. Generally, the less individuals, businesses or government agencies find out about your private affairs, the better.
Reducing taxes on your U.S. investments is also a major consideration. When investing in U.S. property, one must consider whether property is income-producing and whether or not that income is’passive income’or income made by trade or business. Another concern, particularly for older investors, is if the investor is really a U.S. resident for estate tax purposes.