International Investing

General Real Estate Investing
1

I am a Canadian citizen without American citizenship. Are there any legal or international problems that I will encounter if/when I choose to invest in commercial or residential properties in the U.S?

Regards,

DC

2

Yes, FIRPTA (maybe). This is complex and I don’t pretend to be an expert. You can google “FIRPTA” for some basic info, then consult someone who specializes in this.

PS You can structure around this and make elections to avoid this, but again, I’m not an expert.

3

PS - There is a possibility that I may be exploring this in depth in the future in order to attract foreign investors into my fund. It will most likely involve the use of a blocker corp. Feel free to keep in touch.

4

PREO LLC, take a look at this link, “http://firpta.com/?p=27”. This might solve the tax aspects of international investing. I’m also sending out a few emails that should clear up some of these concerns we both have. I will keep you updated.

Regards,

DC

5

You can invest in properties in the USA and can obtain up to 80% financing on residential properties. Need more info?

6

My close friend is Canadian. He said since he lives and works in the U.S and has a greencard, he is taxed like everyone else. If you live and work in Canada, you are probably taxed as a foreigner. Best bet is to check with a CPA who works with investors. You may be able to find one at a local investment club.

7

When I was referring to FIRPTA, I was talking about the withholding the government will impose on the gross proceeds of your sale of real estate (10% I believe). I know that there are ways to “get out” of this withholding, but I guess it doesn’t really matter, because at the end of the day as long as you file your US tax returns, you’re going to get taxed like a US citizen anyway.

There is always the option of forming a corporation. In that case the corporation would be taxable in the US and not the individual. This is useful if you were working with a number of investors and you didn’t want them to be taxable in the US. There are complex implications of this as well:

You don’t want to be taxed on the distributions you take from the corp (foreign withholding) so your cash will be tied up in the corp until you dissolve it and make liquidating distributions.

However this may make sense if you are investing in developing or preconstruction type investments.

Hope this helps.