All Forum Posts by: Sebastien Hitier

Hi Avi,

I worked with 8 property managers all over the US, and they all accept the W8ECI with ITIN. My understanding is that for a non US person, filling a W9 is a felony carrying a maximum of 5 years of imprisonment. I am not a professional, I just get that opinion from reading what is written on the form.

My experience in 2018 was that either HSBC or smaller local banks (First Citizen etc) would be willing to help, larger banks (JPM, Citi, BoA) were not interested.

 I was given premise liability insurance of 1m per occurrence, 2m aggregate. That was the insurance default.

 Bonjour Annie,

congrats, I am a french NRA too. It depends on the level of protection you want. I would own few properties in each LLC as there is some filing to do for each LLC.

- Liability is a probabilistic thing. The lawyer may go for the defendant that has higest expected recovery, assets outside the US are very hard to recover, he may choose to sue someone easier or settle cheap.

- I could not get umbrella, but have property liab insurance, if you have that, the lawyer will see an increased payoff expectation

- Alabama single member LLC can be sued and the Alabama house held by the LLC if unemcumbered by mortgage or other lien is an attractive payoff. The LLC could be pierced, but that is usually harder and less sure especially if you have nothing else in the US. (check this with an Alabama lawyer)

- next level is Alabama LLC owns and operates the house and receives income, Wyoming LLC is sole member of Alabama LLC and receives income.

- each LLC needs to maintain its bank account, or court will usually deem LLC pierced

2 Notes:

1) There are specific IRS filing requirements for each LLC with NRA ultimate beneficiary:

New and existing LLCs will need to obtain an EIN after formation, and to do so will need to designate a Responsible Person. The LLC will need to maintain adequate books and records of transactions to track any payments or transfers of money, property or other reportable transactions between the disregarded entity and its sole member, whether such transactions are direct or indirect.

• Required to obtain an Employer Identification Number (EIN, or federal tax number). In order to obtain an EIN, the disregarded entity must designate a “responsible person.”
• Required to file Form 5472, if there have been any “reportable transactions” during the previous tax year. Formation and dissolution filings are considered to be reportable transactions.
• Required to maintain adequate books and records to support the filing of Form 5472, for as many years as necessary, and make them available to the IRS upon demand
• The new regulations treat each foreign-owned disregarded LLC as a separate corporation for reporting purposes. Therefore, if one foreign person owns more than one disregarded LLC, each LLC will report individually its reportable transactions. If a disregarded LLC owns another disregarded LLC, by itself, with another disregarded LLC or with the foreign person, each of these LLCs is considered separate and must report separately.

2) Opaque vs Transparent Corporate Structure

Besides legal liability, there is a big tax issue, if your worldwide income is taxed by France. It seems to me that the LLC that is owned directly by you could either be disregarded, or a tax filing partnership or a tax filing corporation. You might want to check the impact for that with US and a french accountant.

Hi there, I know that the BP community has a great focus on the US.

Is anyone buying or considering buying in Istanbul/Turkey those days? What is your experience and what are you looking at as a foreign buyer?

The situation for international investor is similar as for US resident for ECI (Effectively Connected Income, eg buying and operating real estate directly) when it comes to US taxes but it depends on country of residence to determine if local tax.

For FDAP (Fixed Determined Payments, eg dividends from investing as limited partner, receiving dividends from REIT...) US taxation will depend on tax treaty with country of residence.

So we can't answer more precisely without knowing country of tax residence and investment types considered.

My current understanding is that both Interest and Dividends are usually FDAP (30% unless there is a tax treaty). There are some conditions under which the interest can be US tax-exempt (not even ECI) under portfolio investment exemptions, but these exemptions explicitely exclude profit contingent distributions.

Hi Steve,

interesting strategy, I am not a tax pro, but I can see 2 potential holes:

- US LLC DE: yes, that would be ECI for anyone in the world, but have you heard of Anson vs HMRC 2015? New fiscal doctrine here: Mr Anson has a LLC pays tax in the US, remits money to UK, pays tax in UK, and then HMRC officers decide that the double tax treaty does not apply because the LLC and him are a distinct person. This might depend on whether you are resident or domiciled in the UK.

- loan from foreign company: loan interest can be tax exempt following US portfolio investment rules if the loan is extended to a US business that is not controled by the lender. So you might lose efficiency here.

 You can DM me for more pointers.

70% LTV is not bad for NRA. They can check HSBC or local banks.

Hi @Pablo P. I invest from abroad too, 

Many Americans own a single house do not setup a LLC for a single property, unless the property is in a high risk area. There comes a time if you own many houses, that owning them through a LLC might help mitigate legal risk.

LLC can either be disregarded for tax purpose, which means that in general you will elect to file for tax and get taxed on net income as US persons are (with minor differences on exemptions/deductions). The alternative is to get the LLC taxed as a corporation which is less common because it is less advantageous.

The case for non US persons is more unusual for CPA, and I believe that the most economic setup for a LLC for tax if at all depends on which country you are resident. Compared to US persons, there are additional filing requirements on foreign-owned LLC since 2016, and the death tax starts above 60k instead of above 11m.

I am definitely not a CPA, but I guess you need to know what the questions are to determine if a CPA is right for you.

You can DM me to discuss your project.