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Keller Williams First Atlanta
200 Glenridge Point Pkwy
Suite 100
Atlanta, GA 30342
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Adriana West (Keller Williams First Atlanta): Real Estate Agent in Roswell, GA
Minority Business Enterprise Certified

The Foreign Investor

International investors are subject to different rules than US Citizens.  This page provides some general information, but each case is unique.  Call us and we will be happy to give you information that is specific to exactly your situation.

Federal Income and Capital Gains Tax: 

If you are a Resident Alien, you are taxed on worldwide income, but credits are allowed for foreign taxes paid.  Non-resident aliens are taxed only on USA sourced income.  “Resident/non-resident” is defined differently for immigration and tax purposes, and there may be country-specific tax treaties that affect your situation.  The capital gain on the sale of US Real Estate is taxable regardless of residency/citizenship status.

A 30% withholding tax is required on all investment-type income earned by a non-resident unless the tax-withholding rate is affected by a tax treaty. 

Foreign Investment in Real Property Tax Act (FIRPTA) is a mechanism for ensuring the withholding of tax on non-resident real estate transactions.  In brief: FIRPTA states that if a US Real Property is purchased from a foreign person/entity, the buyer or a withholding agent must withhold 10% of the purchase prise and remit it to the IRS within 20 days of the transaction. 

1031 Tax Deferred Exchanges of Real Estate

“1031″ refers to a section of the IRS tax law that covers capital gains on US Real Estate by investors.  These laws apply to everyone investing in real estate, citizen, resident, or non-resident – as long as both properties are in the US.  Capital gains on the sale of real estate is always taxable.  A 1031 tax deferred exchange offers tax advantages, but the transactions are very complex and involve experts – especially a “qualified intermediary.”  There are 4 basic rules:

  1. The property must be held for investment or productive use in trade or business – “dealer” property does not qualify
  2. The Property must be exchanged for a like-kind property
  3. The replacement property must be identified within 45 days of relinquishing the original property.
  4. The exchange must be completed (closed) either by the date the next tax return is due or 180 days after selling the original property, whichever is earlier.