ON INCOME PRODUCING PROPERTY?
Generally, non- resident aliens are taxed at a flat 30% federal tax rate on gross rental income, unless they make a certain income election on their returns. This election, which allows for deductions for regular expenses before income tax is calculated, i s commonly known as the ‘net election’. An investor who is interested in income properties should ask any potential tax adviser (lawyer or accountant) if the adviser knows about, and how to exercise, the ‘net election’. Fur t h e r, a nyone who col l e c t s income for a non-resident alien and then pays that i ncome to a property owner is generally required to withhold 30% of gross US source income (such as rent). No withholding is required if the foreign person has a green card, meets the physical or substantial presence test, or if there is a treaty addressing this issue between the US and that person’s home country. prices of luxury goods and luxury homes continue to capture headlines and intrigue the buying public around the world. Foreign buyers are investing in high-end real estate in record numbers in cities such as London, Paris, New York, Hong Kong and Toronto.”