Foreigner wants to invest in the US Real Estate – Tax Issues – Money & Services

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Hi,

My friend, who is a Chinese national and living in China, wants to come to the US and invest in some rental properties. Is it better for him to invest as a individual, or register a corporation or LLC? What is the tax benefits of doing this as an LLC? Beside the estate tax issue which he will not consider( he is only in the 30s), is there any other important tax consideration for him? He should receive rental income every year, and may have capital gains later when he sells the properties.

Besides, I see you also do taxes for foreigners. What is your rates for filing taxes for a foreigner?

Thanks

Answer

Dahman20000:

Yes, I DO file tax returns for foreign nationals, but you will need to email me for a quote, which is customized to the individual after I get a LOT more detailed information.

Setting up a LLC is done for LEGAL reasons (to shield personal assets from litigation), not tax reasons. The LLC is taxed as either a sole proprietorship, a partnership or a corporation, depending on which option is selected when registering the LLC. If no choice is made, the default is as a sole proprietorship.

If the LLC is used, then the real estate income and expenses are reported on a Schedule C.

If he files as an individual, then the real estate income and expenses are reported on a Schedule E.

If he chooses the corporation route, then the income is reported on Form 1120 (for a C corporation) or 1120S (for a sub-chapter S corporation).

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