International real estate and planning after you buy the property is limited.
International real estate planning must be done before you purchase the real estate because a transfer (including gifts) of real estate located in the U.S. by a non United States person require a tax deposit with the U.S. Treasury.
Also, many states have a similar rule.
For example, Ian is a non-resident alien to the U.S. He forms a Nevada LLC (limited liability company) to purchase real estate in Las Vegas. He wants to gift the real estate or the LLC to his children. Before he makes the gift, he must deposit 15% of the value of the real estate with the U.S. Treasury.
Also, Ian owes U.S. gift taxes on the value of the real estate. His children must file an IRS Form 3520 reporting the receipt of the gift. Ian must file a U.S. gift tax return. If, Ian does not pay the gift tax, then the IRS can get the tax from his children.
If Ian dies owning the real estate, his estate will be the U.S. estate tax.
International real estate and planning before you buy the property
Before buying real estate in Las Vegas, Ian creates an irrevocable trust. The trustee of the trust is a licensed bank in Nevada. The trust agreement provides that Ian will make all of the investment decisions for the trust.
The beneficiaries of the trust are Ian and his children. When the trust is created, Ian gifts money into the trust. The money in the trust is used to purchase the real estate.
And that is the whole story. Assuming the trust agreement has some special clauses required by the IRS to avoid estate taxes, Ian has nothing more to do.
When he passes away, his children can continue the trust or the trust can transfer the property to the children with any gift or estate taxes.
International real estate planning for collecting rent
Ian’s Las Vegas property is commercial property. He rent the property on a triple net lease (which means the tenant pays all of the expenses except property taxes and debt service.
If Ian or his Nevada LLC owns the property, then the tenant will withhold 30% of the rent and pay the amount withhold to the U.S. Treasury. However, if Ian makes an election and provides his tenant with a IRS Form W-8, then the tenant does not withhold the 30%.
International real estate planning for the sale of the property.
The sale of real property located in the United States by a non-resident alien is governed by section 897 (on this link).
My first hope for you, is that a corporation does not own the real estate. The low long term capital gain tax rate (approximately 20%) does not apply to a corporation.
For example, Ian’s Nevada LLC owns the property. He has a buyer. If he moves quickly, he can reduce the amount withheld (15% of the sales price) and paid to the U.S. Treasury.
You can learn more about the procedure and other International Real Estate Planning on this link.
After the property is sold, Ian must file a Form 1040NR and report the gain. If his tax liability exceeds the amount withheld, he owes the IRS money.
If his tax liability is less than the amount withheld, he is entitled to a refund.
If you would like to discuss your international real estate planning, then please either email me, Brian Dooley, CPA, MBT at [email protected]
 The IRS has many rulings on a Nevada Self-directed trust.
 Section 871 and section 1441 of the tax code