Real estate taxes for non-citizen

[Eugene Phua]

Hi BP! I'm a aspiring real estate investor from Singapore and I just found out that my country does not have any tax treaty with the US so I would have to pay a flat fee of 30%. In light of that, is it still wise for me to buy US real estate? Any real estate tax professionals can advise me on this? 

[Jonathan Twombly]

You need to establish a "blocker" - a US entity - through which you invest. The withholding of 30% takes place at the revenue level, so you want to make sure that you reduce the revenue. You would purchase the property inside some kind of LLC, which is owned by the Blocker LLC. Then the profits of the property LLC would be sent to the Blocker LLC, meaning the revenue of the Blocker LLC is only profits of the property, not the top-line revenue of the property.

In any event, if you are looking to get debt financing in the US it will be very difficult, if not impossible, without a US entity, so you need to do this anyway.