Reporting and Paying Tax on US Real Property Interests for International Taxpayers
If you’re an international taxpayer with US real property interests, you may be subject to US tax laws and reporting requirements. The IRS provides several guidelines and tips to help you understand your obligations and ensure compliance.
Determining US Real Property Interests
Under US tax laws, a US real property interest includes:
- Interests in parcels of real property located in the US, including buildings and other structures
- Interests in certain US real property holding corporations
- Interests in certain partnerships that hold US real property interests
- Certain personal property that is associated with the use of real property, such as furniture and equipment
International taxpayers with US real property interests must report their income and expenses related to those interests on their US tax returns. This includes reporting rental income, capital gains from the sale of US real property, and any associated expenses.
If you’re an international taxpayer with US real property interests and your income exceeds certain thresholds, you may also be required to file a Foreign Bank Account Report (FBAR) and/or a Form 8938, Statement of Specified Foreign Financial Assets.
Paying US Taxes
International taxpayers with US real property interests must pay US taxes on their rental income and capital gains. If you’re an international taxpayer and you sell US real property, the buyer may be required to withhold a portion of the sales proceeds to ensure that any taxes owed are paid.
It’s important to understand your tax obligations and comply with US tax laws to avoid penalties and other consequences. If you have any questions or concerns, it’s recommended that you consult with a tax professional who is familiar with US tax laws and international tax issues.