Investing in the US as a foreign person

[Luka Milicevic]

Hi BP,

The community has always answered all of my questions, or at the very least, pointed me in the right direction. I have a rather complex question that I was hoping someone could help.

I am in the US. Active in my local market doing rental real estate and residential new construction.

My parents live in South Africa and are South African citizens. They want to start investing via me in the US. 

They are not US citizens, and do not have social security numbers.

My question is.....HOW?

Do I form a family trust and I be the trustee? I have been leaning towards doing a trust. My biggest thing is in what legal entity should they own the homes. Should it be an LLC?

Taxes? Gosh I can't imagine how complicated this will get. Everytime I read through a tax form and see "if anyone is a foreign person" it makes me hurt thinking how complicated that must be

Not too concerned on them getting loans as they will be paying cash. 

To summarize I will be effectively doing the investing on their behalf, but would like for THEM to have legal ownership of the subject property. 

Thanks in advance!

[Willem Botha]

Hi Luka,

I can share my journey with you from a South African Citizen perspective. As usual you need to verify and confirm. 

As a South African Citizen an individual is allowed to take out R1,000,000 / calendar year (Discretionary Allowance) - no questions asked by SARS. If you want to take out more than R1m (up to R10m) / year you need a tax clearance certificate from SARS. 

I have signed for my 1st turnkey property in Memphis a week ago. I registered an LLC and bought the house in the LLC's name - Mainly for personal liability protection. - You will need to investigate the best option for your situation.

At the moment I am talking to CPA's to ensure I stay on the right side of the law in the US / IRS. Bottom line - as mentioned above, you need to talk to the right people at the right times e.g. CPA's but there is definitely no "one size fits all" in this process.

For what is is worth - all profit for property investments in the US will be subject to taxes in the US as well as South Africa (According to my research).

Hope this helps, give me a shout if you would like to chat / connect.