Tax Planning for Foreign Individuals That Own U.S. Real Property

Tax Planning for Foreign Individuals That Own U.S. Real Property

tax planning
By Anthony Diosdi As I have discussed in previous articles, nonresident alien domiciliaries are generally subject to U.S. estate tax on his or her U.S. situs assets. The most common example of a U.S. situs asset is U.S. real estate. In this context, it is important to remember that a nonresident alien domiciliary does not benefit from the same “Unified Credit” as a U.S. citizen or resident alien domiciliary. Instead, a nonresident alien domiciliary is only entitled to a $60,000 deduction (equivalent to a $13,000 credit). Because the value of U.S. real estate owned by a nonresident alien domiciliary almost always exceeds this $60,000 “threshold,” the estate of a nonresident alien domiciliary can be subject to a U.S. estate tax on such real estate.In this context, many nonresident alien domiciliary’s…
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Establishing a Residency Termination Date For Tax Planning Purposes

Establishing a Residency Termination Date For Tax Planning Purposes

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By Anthony Diosdi An alien individual who is a United States resident alien for income tax purposes, but who is a nonresident alien for United States income tax purposes during the following year, will cease to be a resident alien on the individual’s “residency termination date.” Generally, the residency will be the last day of the calendar year.However, the residency termination date for a resident alien will be the last day such an individual is present in the United States during the calendar year if such individual establishes that, for the remainder of the calendar year, the individual’s tax home was in a foreign country and he or she maintains a closer connection to that foreign country rather than to the United States. To qualify for this exception, a statement…
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