Income Tax: FIRPTA automatic withholding tax on sale of property. 10% of gross AND 3.33% additional in California. ($6 million sale, $799,800 in California). No capital gain treatment on sale. Ownership of US real estate is considered a trade or business and taxed at higher rates. Maximum rate 35% or higher. US estate tax owed on net value of real estate in the event of the foreign owners death. Maximum rate 45%. Only $60,000 of value can pass without estate tax. Income is taxed at a flat 30% fed rate California is taxed at flat 7% flat rate Alternative: foreigner can elect to report Ownership as a trade or business, and p ay tax at marginal ordinary rates: (15%-35% federal, and 9.9% California. This allows for deductions to reduce taxable income. There is no capital gain lower tax rate for foreign ownership of US real estate. U.S. Real estate value in 2011 $6 million Non-U.S. citizen/resident Purchased in 2009 5 million Foreign person dies in CA: Statutory fees for attorney $73,000 Fed. Estate Taxes $2,415,800 (due within 9 months) Most likely the U.S. real estate will have to be sold to pay the fees and taxes due! Income Tax Strategies: 1. Keep ownership interest at fixed value. Amount determined by US estate tax limits. $60,000 allowed for Nonresident alien. No FIRPTA. 2. Create a creditor position for growth potential in property. No FIRPTA. 3. Participate in a captive insurance program to insure your real estate ownership. This provides valuable deductions for income producing real estate and removes taxable equity build upon sale. Also provides asset protection for foreign owner. Estate Tax Strategies: 1. Set up an LLC to own the real estate and have the LLC owned by a foreign corporation. 2. Have the foreign owners interest in the foreign company held in trust for their benefit. (This can be in an asset protection or dynasty trust) This removes the US real estate from the US estate tax system. No death taxes due. Provides asset protection and continuity for the foreign owners family .NO FEES OR TAXES DUE. SAVE $2,488,880 Foreign Person US Real Estate Delaware LLC Sets Up LLC buys Foreign person is LLC Manager. Foreign person has fixed equity position in LLC. Member (Owner of the LLC ) is a Foreign Company. It loans to LLC to buy. Foreign company Formed in Zero tax Jurisdiction. Owned by trust for foreign person and their family. LLC is structured with you as manager—right to management fee. Foreign corporation ownership value in the LLC grows with little gain. NO FIRPTA OR CALIFORNIA WITHHOLDING.BECAUSE YOU HAVE A CREDITOR POSITION AND ASSET PROTECTION. Delaware LLC pledges real estate for a private placement captive insurance contract for the foreign owners. Deed of trust is placed on real estate and UCC financing statement filed on LLC in favor of private real estate insurance contract. . Pledged to Cover Premiums Private Real All ownership & value Due for Business Estate In the protected cell Liability Insurance on Insurance Belongs to foreigner Real Estate Contract And their family This is not commercial insurance. There is a private licensed captive insurance company in Belize. Licensed to offer business liability insurance for business owners. The business owners contract and rights are held as a separate protected cell under the main company. No assets are commingled with others insured. Business owner can determine the risks to insure, what premiums are paid and when and how premiums are invested. Approved structure under IRS guidelines. 1. Join our program now and own and operate U.S. real estate in the most tax effective way possible. 2. Protect yourself from creditors 3. Maintain privacy and confidentiality. 4. Take control of your future and reach economic goals. 1. Delaware LLC pledges real estate for a private placement captive insurance contract to protect equity. You own the rights to the contract (equity stripping)— nothing to tax in the U.S. or assets for a creditor to seize. 2. All ownership and value in the protected cell belongs to you and your family.
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