Foreign Real Estate Investors Must Consider All US Taxes

Law360 (July 12, 2018, 2:44 PM EDT) -- Foreign inbound investors in U.S. real estate anticipate owing federal income tax on the profits from the rental and sale of their properties. However, many do not realize that there are state and local taxes that will be incurred. This is because, many foreign investors live in countries where there is a national income tax, but no state and local tax. The state and local taxes can have a significant effect on the cash flow and internal rate of return to investors.

Let's assume the foreign investors will structure their acquisitions with the typical blocker structure. A foreign corporate parent is...

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