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How will a U.S. real estate purchase affect my taxes?
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Property Taxes
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Income Tax on Rental Income - Used as rental property - Form 1040NR - Election of ECI
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Capital Gains Tax & FIRPTA - Tax on Gain when you dispose the property -Section 1031 to defer the Capital Gain Rolling into another investment Property
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Gift & Inheritance Tax & Estate Tax - Tax when you give your property to your loved ones through gift or estate
Under certain circumstances the capital gain recognized when you sell your U.S. property can be deferred by utilizing the U.S. tax code Section 1031. A 1031 exchange helps defer capital gains taxes by selling your investment property and rolling your capital gains over to purchase a like-kind property. Usually, you have 180 days to purchase the new property.
The disposition of a U.S. real property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests.
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