Buying US property from abroad: the structure decision comes first

A foreign buyer of US real estate faces a structuring question that a domestic buyer does not, and the right answer depends on facts that are personal rather than financial. Three exposures drive it. Income tax on the rent while the property is held. FIRPTA withholding when it is sold, which is a buyer-side obligation but very much the seller's cash flow problem. And US estate tax exposure, where a non-resident's threshold before tax applies is dramatically lower than a US person's — this is the one that most often surprises, because it has nothing to do with how the property performs. Holding individually is the simplest and leaves that estate exposure fully open. A single-member LLC is transparent for income tax and changes the liability picture without, on its own, solving the estate question. A corporation — domestic or foreign — changes both the tax treatment and the estate answer, and brings its own costs and filing obligations. Trusts are used for the same reason and with the same complexity. There is no structure that is best in general. There is a structure that is best given the buyer's country of residence, whether a tax treaty applies, how many properties there will be, whether family members are involved, and the intended holding period. What is consistent is the sequencing. Deciding before the purchase costs a consultation. Restructuring afterwards can be a taxable event, can trigger transfer taxes, and can require the lender's consent. This belongs in front of a cross-border tax advisor before the offer, not after the closing. This article is general information, not legal, tax or financial advice. Rules change and every deal is different — check your own case with a licensed professional. Alberto Zaltzberg — Adonait · adonait.com