FIRPTA Tax Planning And Compliance After Tax Reform

This program will provide the participants to properly advise their foreign investor clients, on how to best structure their U.S. real property investments, under the new tax rules of the Tax Cuts and Jobs Act. This will be in regards to the U.S. federal income, estate, and gift tax implications and planning techniques.

Advising foreign real property investors requires tax and other professionals involved with foreign real property investors to understand the U.S. tax reporting and withholding requirements to best advise their clients and provide investment structuring options.

The new tax law did not change the existing liability and withholding requirements on the disposition of U.S. real property interests but, it did bring possible changes in FIRPTA investment structures as a result of the lowered withholding tax rate on capital gains and liquidating distributions paid by REITs. There are additional Net Operating Loss and interest expense limitation rules as well as depreciation rule changes under the new tax law. Also, the use of a blocker corporation may likely be subject to Base Erosion Tax (BEAT) on interest payments made to or accrued by blocker corporations to its related foreign lender.

Additionally, participants will be exposed to the use of offshore common law and civil law wealth transfer structures, to invest in the U.S. real property, the U.S. tax implications, and reporting requirements of the said structures investing in U.S. real property.

• Overview of tax rules that apply to foreign investors in U.S. real estate 

1.    U.S. income, estate, and gift tax
2.    Income tax residency and estate and gift tax residency rules
3.    FIRPTA and withholding requirements
4.    Treaty application

• A typical structure of blocker corporation for foreign persons or corporations to hold U.S. real property assets
• Changes in TCJA tax reform that will specifically impact income from owning or disposing of U.S. real property 

1.    Corporate rate reduction and FIRPTA withholding rates
2.    Treatment of REITs
3.    Base Erosion and Anti-Abuse Tax (BEAT)
4.    Depreciation changes
5.    New NOL carryforward rules

• Planning opportunities through entity selection or change

The U.S. tax rules governing investment in the U.S. real property by foreign investors are complex. Considering the significant changes under the new tax law (Tax Cuts and Jobs Act, the advisors and others involved with foreign real property investors, should understand the impact of the new tax law on the buying, holding and disposition of U.S. real property by foreign investors.

The participants will be able to understand the tax implications of purchasing U.S. real estate individually or through a structure (U.S. LLC, foreign corporation, U.S. corporation or a trust), tax reporting obligations for the foreign investors, how the new tax reform changes may provide opportunities for structuring real property investments by foreign investors, the effect of Base Erosion Tax (BEAT) (may impact corporate blockers), new FIRPTA rules that apply to REITs, and the tax implications of civil law structures investing in U.S. real property.

• CPAs
• Attorneys (real estate, private client, tax and immigration)
• Trust officers
• Real Estate professionals
• Real Estate investment advisors
• Real Estate fund professionals
• Other Real property advisors

For over 25 years, Jack has specialized in wealth tax matters for international private clients. He is widely published on various matters in the U.S. and abroad. He presents at international, as well as domestic conferences, on various international private client matters and investment, in the U.S. real property. He acts as outside counsel and consultant for a number of U.S. and foreign trust companies, on highly complex foreign trust matters.

In 2004, Jack had an article published in Trusts & Estates professional journal, namely, Foreign Trusts: The Capital Loss Debate. This article is still regarded, in the professional community, as the standard for U.S. tax treatment of net capital losses for U.S. beneficiaries of foreign non-grantor trusts.