07 September 2016
Asians love the U.S. as a place to live, buy homes, invest, go to school, and run their businesses. Over the past five years, we have seen an unprecedented increase in foreign investment in the US — particularly as a new flood of Chinese investors joins the tide of Japanese, Korean, Malaysian and other Asian investors.
My partner Scott Harshman counsels foreign investor clients from all over the world. He tells them that it is urgent to get an early grip on potential U.S. tax consequences and structures when first contemplating their investment in the U.S. The key is doing the analysis BEFORE making the investment. The earlier, the better. Otherwise, the unfortunate foreign investor may become ensnarled in a messy tangle of tax and regulatory issues never imagined.
Here is what Scott says . . .
Tax Alert for foreign investors looking at U.S. investments
By Scott Harshman, Partner JMBM
Pre-immigration and Non-U.S. Resident Planning
It does not matter whether foreign individuals are investing in U.S. property and hoping to become residents in the U.S., or are planning to invest in U.S property without U.S. residence: the investment is particularly complex for these individuals.
The definition of “U.S. property” for international tax purposes is a term of art, and the details are complex. That is why – to avoid potential problems and minimize U.S. tax exposure – planning for the ownership of U.S. property should be done before the investment is made.
If this planning is well thought-out and structured properly, the foreign individual – and the business entities owned by such individual – can avoid many pitfalls associated with the U.S. tax and legal systems.