As an International Real Estate Investor, buying a home or investment property may seem a bit confusing.
Apart from federal laws, each state in the United States may have different laws regarding the purchase and selling of real estate.
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Taking Title as an International Real Estate Investor in the State of Arizona
When you purchase real estate, you get to hold title to the property.
As an international real estate investor, it is best to know how you want to hold title to real estate after you have purchased it.
In the state Arizona, there are 4 main ways of taking title to real property.
- Community Property,
- Joint Tenancy with Right of Survivorship,
- Community property with Right of Survivorship and
- Tenancy in Common
Arizona is a community property state.
This means any real property acquired by a husband or wife is presumed to be community property unless otherwise legally specified. The title may be held as Sole and Separate property by one spouse. The other spouse has to execute a disclaimer deed to avoid any presumption of community property.
Title can also be held in the name of an entity such as a LLC, Corporation or Trust.
You may seek counsel of an attorney, accountant or other professional on how to take title.
FIRPTA – Foreign Investment in Real Property Tax Act
As an international real estate investor in the United States, FIRPTA is one thing you need to know and how it affects you during a transaction.
FIRPTA usually comes into play not during the purchase of your investment but when you decide to sell the property.
Prior to 1981, international real estate investors were often exempt from paying any tax during the sale of their real estate investments they had acquired.
FIRPTA requires a 10% tax withholding on the sale of real property by a Non US Resident or US Citizen, unless the real estate transaction is exempt from FIRPTA.
Find out what the FIRPTA exemptions are here
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The tax on gains during the sale of real estate can be deferred during a 1031 exchange.
The exchange has to be between like-kind properties.
Here are some applicable forms as an international real estate investor.
To apply for a (TIN) Tax Identification Number, you will need the IRS Form W-7
If you already have real property the United States and you are looking to sell, IRS Form 8288-B
For the 1031 exchanges , use the IRS Form 8824