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The International Investor

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The International Investor

International investors have the opportunity to diversify their investment portfolios by investing in Real Estate in the United States.  There are a few things to keep in mind when preparing to invest with Holdfolio.

International investors from anywhere can invest in Holdfolio offerings but there are a few requirements necessary prior to investing.

Working with International Investors

International investors from anywhere can invest in Holdfolio offerings but there are a few requirements necessary prior to investing.

 

Holdfolio requires our International Investors to fill out a W-8ECI which is the IRS Certificate of Foreign Person’s Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States.

 

The form can be found here : https://www.irs.gov/pub/irs-pdf/fw8eci.pdf

 

 

International Investors must also obtain a valid ITIN.

 

What is an ITIN?
An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. It is a nine-digit number that always begins with the number 9 and is issued to those that are not eligible for a social security number.

ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code.
What is an ITIN used for?
ITINs are for federal tax reporting only, and are not intended to serve any other purpose. IRS issues ITINs to help individuals comply with the U.S. tax laws, and to provide a means to efficiently process and account for tax returns and payments for those not eligible for Social Security Numbers (SSNs).

Other examples of individuals who need ITINs include:
• A nonresident alien required to file a U.S. tax return
• A U.S. resident alien (based on days present in the United States) filing a U.S. tax return
• A dependent or spouse of a U.S. citizen/resident alien
• A dependent or spouse of a nonresident alien visa holder

 

The international investor files a Non-resident US tax return.

 

This way taxes are not withheld from the investor’s income upfront.

  • Withholding requirement is on the LLC. 1099 issued from Property Management Company to the LLC, LLC provides W9 to Property Management company.
  • LLC provides K1 to the international investor
  • Investor needs to obtain an ITIN (does not need W-8)
  • LLC required withholding federal income tax unless Investor’s tax liability from the LLC income is estimated to be less than $1,000 AND the investor provides the LLC with a properly completed form 8804-C. If investor tax liability is more than $1,000 then withholding is required.
  • Any income of less than $13,500 will result in a tax liability of $1,000 or LESS and therefore no withholding is required.
  • Investor is required to file 1040NR to report the K1 income (1040NR = Non Resident tax return)
  • Tax brackets:
    • Exempt up to $4,000.
    • $4,000 to $9,300 is 10% tax rate
    • $9,300 is where 15% kicks in & max is 39.6%

We always encourage investors to seek the help of an informed CPA to help determine the structure & implications of their investment with us.

 

Recommended CPA  — $495 one time fee for tax compliance

Christopher J. Picciurro, CPA, MBA, PFS, ARA

Executive Officer & Co-Founder, Integrated Financial Group

[email protected]ntegratedfg.com

www.integratedfg.com

1-888-IFG (434) 7791 Extension 106

 

Although it can sound complicated, working with a competent CPA and doing a bit of work ahead of time can make the investment process with Holdfolio, straightforward, easy and a passive way to invest in Real Estate in the US Midwest market.

Because we are a Real Estate Company comprised of specialists in our field and we are not tax professionals, we always encourage investors to seek the help of an informed CPA.  This will help the international investor to determine the structure and implications of their investment with us.

 


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