At Horowitz Legal PLLC, we have extensive experience assisting non-U.S. clients in structuring their investments in the U.S. (inbound taxation) in addition to aiding U.S. persons and businesses maximize their investments abroad (outbound taxation).
- Foreign Bank Account Reports or FBARs
- Offshore Voluntary Disclosure Program
- Structuring Inbound Foreign Investments
- Structuring outbound U.S. Businesses.
- Act 20 and Act 22 Puerto Rico Tax Incentives
- Foreign Account Tax Compliance Act (FATCA)
- Common Reporting Standards (CRS)
Foreign Investment In US Real Property (?FIRPTA?)
Horowitz Legal PLLC works closely with title companies and other real estate professional to ensure that transactions involving foreign sellers of real property comply with FIRPTA. Because of the increase in foreign investment in U.S. real property, it is imperative to have the correct structure in place at the time of purchase in order to maximize your investment. Some common planning devices are as follows:
- Limited Liability Company. Utilizing an LLC, the investment will be protected from outside creditors.
- Tax Considerations. The property should not be owned by a foreign individual in order to avoid estate tax inclusion. It is imperative to hold the real property in an appropriate entity structure in order to prevent estate tax inclusion of the investment upon the foreign investor’s death.
Estate Planning for NRA Spouses
The rules for U.S. citizens or residents and NRAs are different for Estate and Gift Tax purposes. The U.S. gift tax applies to a NRA only if the tangible personal property is physically located within the U.S. Therefore, transfers of intangible personal property such as stock, debt obligations and other business entities are exempt from gift taxes. However, the stock of U.S. corporations is subject to estate tax since the shares are considered sitused in the U.S.
- The estate of either a U.S. citizen or a non-U.S. citizen is entitled to a marital deduction for property situated in the U.S. passing to a U.S. citizen spouse. If the surviving spouse is not a U.S. citizen (regardless of domicile), transfers will qualify for the marital deduction only if the surviving spouse becomes a U.S. citizen before the filing of the U.S. estate tax return or the property passes to a Qualified A Qualified Domestic Trust (QDOT) is a statutorily created trust designed to allow a surviving spouse, who is not a U.S. citizen, to qualify for the unlimited marital deduction. The intent of the QDOT legislation is to preserve the marital deduction to ensure that a noncitizen spouse does not leave the United States with assets inherited without paying federal estate tax on those assets. The QDOT must pay all of the income to the spouse for life. A QDOT must have at least one U.S. trustee, and may make principal distributions only to the surviving spouse. Estate taxes are due on distributions of principal to the surviving spouse from the QDOT, or upon the death of the surviving non-citizen spouse.