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  • 1.  Managing properties for foreign individuals

    Posted 06-14-2024 10:17

    Hi All!

    I wanted to share this information with all our beloved Real Estate Agents, if you are managing rental properties for foreign individuals without a U.S. tax ID, just like with FIRPTA, you, THE REALTOR is the withholding agent, meaning is in YOUR best interest to send 30% of the collected gross rent (without taking into account any expenses) and remit the money to the IRS on behalf of the owner of the property, it is vital that you advise the owner to comply with the fiscal rules so YOU real estate agent managing rental properties do not suffer the consequences, below is a letter sent to an agent here in TX who have collected rent for her a few clients for over 3 years and she did not advice them to file a return, the IRS is now making her responsible for over $24,000.00, we are now trying to convince her clients to file 3 years of U.S. tax returns so she can be forgiven this debt.

    A professional, licensed and experienced tax firm can work on a strategy and make the appropriate elections to avoid having to send 30% of the rent and specially having the realtor liable for the possible tax owe by a foreign owner of real estate property. 



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    Mary Enzi CAA
    Tax Solutions – FIRPTA Consulting
    [email protected]
    +1 (281) 578-1040
    Barker TX
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  • 2.  RE: Managing properties for foreign individuals

    Posted 06-17-2024 09:06

    Very interesting, and it applies to property management companies too!

     

    Arthur Schwartz

    Actuary

    Actuarial Services / Financial Solvency Division

    Louisiana Department of Insurance

    1702 N. Third St (70802)

    P. O. Box 94214, Baton Rouge, LA 70804-9214

    P:225-342-7639

    [email protected] | https://ldi.la.gov

     

     

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  • 3.  RE: Managing properties for foreign individuals

    Posted 06-18-2024 10:11

    Arthur;

    Yes, property managing companies or real estate agents working with foreign investors/individuals, it is important to let the foreign investors know that they also have a filing requirement while receiving rental income in the U.S. or to retain 30% of the gross income and send it to Treasury as a deposit, just like FIRPTA, same concept.



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    Mary Enzi CAA
    Tax Solutions – FIRPTA Consulting
    [email protected]
    +1 (281) 578-1040
    Barker TX
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  • 4.  RE: Managing properties for foreign individuals

    Posted 06-19-2024 06:37

    Does this apply if the check is payable to the foreign entity and the manager receives it and forwards along but without depositing or issuing a disbursement?



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    Lisa Delaney
    Partner/Atty.
    Carvin & Delaney, LLC
    Braintree MA
    +1 (781) 917-7977
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  • 5.  RE: Managing properties for foreign individuals

    Posted 06-19-2024 20:54

    Lisa:

    Regardless of who the check is issue to, if you are managing properties for a foreign individual you have to withhold 30% of the gross income, UNLESS the foreign individual has taken steps to remove the need for this withholding.

    The foreign owner of U.S. real estate property must obtain a U.S. tax ID and file a U.S. tax return including the income and expenses related to the rental property. 

    Here the IRS link (very extensive article) about withholding for non U.S. individuals 

    https://www.irs.gov/publications/p515 



    ------------------------------
    Mary Enzi CAA
    Tax Solutions – FIRPTA Consulting
    [email protected]
    +1 (281) 578-1040
    Barker TX
    ------------------------------

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  • 6.  RE: Managing properties for foreign individuals

    Posted 06-18-2024 10:11
    Does that Apply because the realtor collected the rents into the realtor's bank account?  Would it be the same if the realtor collected the funds in some bank account that belongs to the landlord?

    Adrianne Patterson
    Title Agent
    Fort Lauderdale Title Group, LLC


    This e-mail message may contain confidential or legally privileged information and is intended only for the use of the intended recipient(s). Any unauthorized disclosure, dissemination, distribution, copying or the taking of any action in reliance on the information herein is prohibited. E-mails are not secure and cannot be guaranteed to be error free as they can be intercepted, amended, or contain viruses. Anyone who communicates with us by e-mail is deemed to have accepted these risks. Fort Lauderdale Title Group, LLC is not responsible for errors or omissions in this message and denies any responsibility for any damage arising from the use of e-mail. Any opinion and other statement contained in this message and any attachment are solely those of the author and do not necessarily represent those of the FLTG.



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  • 7.  RE: Managing properties for foreign individuals

    Posted 06-18-2024 11:21

    Hi Chris:

    As a general rule, a non-US person who rents out a US home is subject to a 30% withholding tax imposed on the gross amount of each rental payment. This means if a foreign person owns house, and rents it out for $2,000 a month, $600 of each $2,000 monthly rent payment payable to the foreign owner must instead be sent directly into the IRS (and not sent to the non-US owner). Who is responsible for sending in the 30% of the gross rents tax into the IRS? The foreign owner, the US property manager (i.e., anybody who collects the rent payment for the foreign owner) and even the tenant, are all responsible to send the 30% tax into the IRS. The IRS can go after any of the parties (tenant, property manager and foreign owner) who fail to send in the 30% of the gross rental payments tax.

    But removing this 30% withholding can be easy!.

    The foreign owner of U.S. real estate property must obtain a U.S. tax ID and file a U.S. tax return including the income and expenses related to the rental property. 

    Here the IRS link (very extensive article) about withholding for non U.S. individuals 

    https://www.irs.gov/publications/p515 



    ------------------------------
    Mary Enzi CAA
    Tax Solutions – FIRPTA Consulting
    [email protected]
    +1 (281) 578-1040
    Barker TX
    ------------------------------

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  • 8.  RE: Managing properties for foreign individuals

    Posted 25 days ago

    I called over to Tax Solutions with a FIRPTA question a couple days ago – it had nothing to do with a file they were working on.  I was transferred over to Mark who provided me with information and answered all my questions for almost an hour.  He is so knowledge and was more than happy to answer my questions.  I'm not sure the file I was speaking to him about will develop into a file for Tax Solutions, but I know who I will be sending my next FIRPTA file to.  I was very grateful for the information Mark shared – he is so knowledgeable.

     

    Best Regards,

    Bonnie Phillips

     

    850 NW Federal Hwy, Suite 475

    Stuart, FL 34994

    Office: 772-209-0092

    Broward:  954-432-9544

    Fax:      954-756-7169

    [email protected]

     




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  • 9.  RE: Managing properties for foreign individuals

    Posted 24 days ago

    Bonnie:

    It was a pleasure talking to you and we are glad to know the information we provided was useful.

    Never hesitate to give us a call, we are always happy to answer your questions! 



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    Mary Enzi CAA
    Tax Solutions – FIRPTA Consulting
    [email protected]
    +1 (281) 578-1040
    Barker TX
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    ALTA Marketplace