Can a foreign corporation be a US real property holding corporation?
Although a foreign or domestic corporation can be a USRPHC, the implications are generally different. If a domestic corporation is a USRPHC or was one within the 5 years preceding the disposition and the cleansing rule does not apply, its stock is a USRPI (IRC 897(c) (1)(A)(ii)).
What is a United States real property holding corporation?
U.S. Real Property Holding Corporation (USRPHC)
In general, a corporation is a U.S. real property holding corporation if the fair market value of the U.S. real property interests held by the corporation on any applicable determination date equals or exceeds 50 percent of the sum of the fair market values of its –
Are foreign corporations subject to FIRPTA?
Foreign corporations are subject to taxation and withholding under the Foreign Investment in Real Property Tax Act (FIRPTA). Those treated as domestic corporations can eliminate FIRPTA taxes, but are subject to other portions of the U.S. tax code.
Who is considered a foreign person?
A foreign person includes a nonresident alien individual, foreign corporation, foreign partnership, foreign trust, foreign estate, and any other person that is not a U.S. person.
Who is considered a foreign person under FIRPTA?
A foreign person is defined for FIRPTA purposes to mean any person other than a United States person. Additionally, a foreign person includes a foreign government. A foreign person includes a nonresident alien which is defined as neither a U.S. citizen nor a resident of the U.S.
What is Usrpi?
IRC 897 broadly defines the term “U.S. real property interest” (USRPI) to include the following: An interest in real property located in the United States or the Virgin Islands.
Is a lease a US real property interest?
The term “interest in real property” includes fee ownership and co-ownership of land or improvements thereon, leaseholds of land or improvements thereon, options to acquire land or improvements thereon, and options to acquire leaseholds of land or improvements thereon.
What is a non recognition transaction?
A nonrecognition transaction is a non-claimable gain or loss, according to the IRS. It applies as long as a reorganization occurs and property is exchanged solely for stock or securities. When assets are distributed in these scenarios, the gain or loss is a nonrecognition transaction and is not taxed.
Can a foreign corporation elect to be treated as a US corporation?
A foreign corporation that makes an election under section 897(i) shall not be treated as a domestic corporation for purposes of any other provision of the Code or regulations, except to the extent that it is required to consent to such treatment as a condition to making the election.
Should a foreign corporation invest in US real estate?
The main advantage to owning real estate through a foreign corporation is that it will allow you to bypass US estate tax. The US estate tax is based on individual non-resident ownership of US assets, but in this case the assets are directly owned by a foreign corporation.
Do foreign investors pay US capital gains tax?
Nonresident aliens are subject to no U.S. capital gains tax, but capital gains taxes will likely be paid in your country of origin. … If you are a resident alien and hold a green card—or satisfy resident rules—you are subject to the same tax rules as a U.S. citizen.