Non -resident foreigners in the USA are generally retained 30% of their income tax. This includes interests, distributions and dividends. The good news is that in general taxes are not paid for the sale of financial assets, such as shares or installments in investment funds.
In the case of Real Estate, the income is also subject to a retention of 30% of the gross income. But you can choose to pay taxes on net basis, which is usually very beneficial for high maintenance costs. The sale of real estate is reached by a retention of 15% of the sale price, which in some cases can partially recover.
In addition, in recent years, financial instruments for investment in Real Estate have been popularized, such as the so -called Reits, which facilitate real estate investment for small and medium -sized investors, with a special tax treatment.
But the use of investment vehicles can completely change the tax equation, highlighting mainly four: the corporation, the limited company – called LLC-, the foreign society, and a combination of the above.
The corporation pays taxes to a quite reduced aliquot of 21%. The disadvantage for the foreigner is that, when withdrawing dividends, he has to pay again, this time 30% of what he receives. Therefore, the corporation is not usually a friendly structure and is usually reserved for long -term investments and with a more sophisticated planning.
The LLC, despite being an American society, is considered “transparent” taxationly, so taxes are paid only at the level of the foreign partner. This facilitates the procedures for the purchase and sale of assets, limits the responsibility of the partners, and can help avoid withholdings, all this without paying twice as with the corporation. This is why it is one of the most chosen alternatives by investors.
Foreign society has the great advantage of neutralizing one of the most aggressive taxes that exist in the United States: the inheritance tax, which amounts to 40% of US assets that foreigners had when they died. However, in certain cases it can generate a double imposition situation similar to the corporation, or even triple if the company also pays taxes in the country where it is constituted.
Whether new investments, or investments made without structure or with structures that may be obsolete, it is good practice to plan them for the medium and long term considering all the alternatives and combinations that exist, and the tax impact of each one.
Tomas Cabanelas, a lawyer specializing in Tax Law [email protected]
Rinci & Asociados study – www.estudiorinci.com
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