A foreign investor in U.S. real estate must pay taxes such as annual property tax, taxes on rental income, and, upon sale, may be subject to withholding under FIRPTA.
At Jurado & Associates, P.A., we see that many investors lose money not because of the investment itself, but because they fail to properly structure their tax obligations.
Do you pay taxes when buying a property?
There is no specific federal tax on purchasing property.
However, there are costs such as:
• Closing costs
• Local taxes
• Legal fees
The real tax impact begins after acquiring the property.
What is property tax and how does it work?
Property tax is a mandatory annual tax.
It is characterized by:
• Being administered at the local level
• Varying based on location and property value
• Applying even if the property does not generate income
Failure to pay can result in penalties and even affect ownership of the property.
What taxes apply if you rent out the property?
Rental income is subject to taxation in the United States.
It is important to understand that:
• You may have options on how to be taxed
• Certain deductions are allowed
For example, you may deduct:
• Maintenance
• Management expenses
• Interest
A proper structure can significantly reduce your tax burden.
What is FIRPTA and why is it important?
FIRPTA is one of the most important rules for foreign investors.
When you sell a property:
• Generally, 15% of the sale price is withheld
• This amount is sent to the IRS
Important:
This withholding is not the final tax—it is an advance payment.
In many cases, investors can recover part of that amount with proper planning.
What is an ITIN and why do you need it?
The ITIN (Individual Taxpayer Identification Number) is essential to:
• File taxes
• Report income
• Request refunds
Without this number, the tax process becomes more complex and limited.
How does legal structure affect taxes?
The way you purchase the property significantly impacts your tax obligations.
For example:
• Buying in your personal name
• Buying through an LLC
Each option has different implications for:
• Taxes
• Asset protection
• Administration
In our practice, this is one of the most important decisions an investor can make.
What tax mistakes do foreign investors make?
The most common mistakes include:
• Not reporting rental income
• Failing to take advantage of deductions
• Not understanding FIRPTA
• Not structuring the investment properly
• Not seeking professional advice
These mistakes can cost thousands of dollars.
What is the difference between paying taxes and planning them?
Paying taxes is mandatory.
But planning them allows you to:
• Legally reduce your tax burden
• Optimize your investment
• Protect your profitability
In our experience, this difference defines the financial success of an investment.
How can you avoid tax issues from the start?
The key is to:
• Understand the rules before investing
• Choose the right structure
• Work with legal and tax professionals
This allows you to invest with clarity and avoid surprises.
Quick Answer Summary:
• There is no direct federal tax when buying
• You must pay annual property tax
• Rental income is taxable
• FIRPTA applies when selling
• An ITIN is required for compliance
• Legal structure impacts taxation
• Tax planning helps prevent losses
At Jurado & Associates, P.A., we help foreign investors structure their real estate investments, comply with tax obligations, and optimize profitability in the United States.
We’re more than lawyers; we are strategists and problem solvers.
If you want to invest without tax mistakes and protect your money, now is the time to act.
Contact us today at +1 (305)-921-0976, via WhatsApp, or by emailing [email protected] to begin your investment with trusted legal support.
