I don't live in the U.S. but have U.S. Real Estate Investments. Any U.S. tax filing required?

Yes, if you own U.S. real estate investments, you may have U.S. tax filing obligations, even if you don't live in the U.S. Here are the key considerations:

1. Income from U.S. Real Estate

• If your property generates rental income, you are required to file a U.S. tax return (Form 1040-NR for non-residents) to report the income.
• You can elect to treat rental income as "effectively connected income" (ECI), which allows you to deduct expenses such as property management fees, depreciation, and repairs before calculating your taxable income. Without this election, rental income may be subject to a flat 30% withholding tax on gross income.

2. Sale of U.S. Real Estate

• When you sell U.S. real estate, the transaction is subject to the Foreign Investment in Real Property Tax Act (FIRPTA). Buyers are generally required to withhold 15% of the sale price, which can be credited against your actual tax liability when you file a return.
• You must report the sale on your tax return and pay capital gains tax, which is calculated on the difference between your sale price and your adjusted basis (original purchase price plus improvements, minus depreciation).

3. State Tax Obligations

• In addition to federal taxes, you may need to file state income tax returns if the property is located in a state that imposes income taxes.

4. ITIN Requirement

• As a non-resident, you will need an Individual Taxpayer Identification Number (ITIN) to file U.S. tax returns.

5. Estate Tax Considerations

• U.S. real estate may also be subject to U.S. estate taxes upon your death. Non-residents have a much lower estate tax exemption ($60,000 compared to over $12 million for U.S. citizens).

It's essential to consult with a U.S. tax professional, like our firm to ensure compliance and optimize your tax situation. We are here to help you navigate the complexities of U.S. tax laws and fulfill your filing obligations.