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Tax Structuring Considerations for Foreign Investors in U.S. Real Estate

Product Code - TMA81
Speaker(s): Alan Appel and Jack Mandel, Bryan Cave LLP
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The depressed state of the U.S. real estate market continues to attract foreign investors who see long-term opportunities in both commercial and residential property despite FIRPTA’s withholding tax imposed on the transfer of U.S. real estate by a non-resident alien.

In determining the appropriate ownership vehicle for U.S. property, whether U.S LLC; foreign corporation, U.S. corporation or individual ownership, counsel for foreign investors must balance a variety of tax consequences, U.S income, capital gains and estate taxes.

In addition to entity selection, there are tax-planning opportunities in structuring the deal. The use of 1031 exchanges is one of these choices. Others include using tiered entities.

This webinar will review tax strategies for foreign investors in U.S. real estate to structure the purchasing entity as well as tax planning opportunities for structuring the deal.

I. Investment structure alternatives

  • Individual ownership
  • Ownership via U.S. LLC
  • Ownership via foreign corporation
  • Ownership via U.S. corporation
  • Other entity structures

II. Tax consequences for investment structures

  • U.S. income tax
  • U.S. capital gains rate
  • U.S. estate tax

III. Tax strategies for structuring the deal

  • 1031 exchange
  • Tiered entities
  • Other strategies

Educational Objectives:

  • Learn the benefits of owning U.S. real estate in an individual capacity, from a foreign investment perspective,
  • Understand the tax consequences involved in purchasing U.S. real estate via a U.S. LLC
  • Identify how you can leverage the 1031 exchange in purchasing U.S. real estate

Alan Appel and Jack Mandel, Bryan Cave LLP

 Alan Appel, Of Counsel, Bryan Cave LLP
Alan Appel focuses his practice in international and domestic tax planning involving taxation of mergers and acquisitions, partnerships, joint ventures, limited liability companies and tax controversy matters. Mr. Appel began his career as a trial attorney in the Office of Chief Counsel, Internal Revenue Service in Washington, D.C., and New York City. On behalf of the American Bar Association Tax Section, Mr. Appel had primary responsibility for drafting and submitting comments to the U.S. Treasury Department and IRS concerning the scope of the guidance provided by the proposed regulations under Section 1446 of the Internal Revenue Code and also was asked by the Office of the Chief Counsel to train its attorneys on this issue. Mr. Appel recently published two articles on the Section 1446 regulations in The Journal of International Taxation, a third article in the Tax Management Memorandumand a forth article in the Tax Management International Journal.
Mr. Appel is on the Board of Advisors for the Journal of International Taxation and the Journal of Taxation and Regulation of Financial Institutions. He has published articles in The Journal of Taxation, Tax Management Memorandum, Tax Management International Journal, The Journal of International Taxation, the New York Law Journal and the Westchester Bar Journal. Mr. Appel has appeared on both radio and television discussing various income tax issues. Mr. Appel is a member of the adjunct tax faculty of the New York Law School.

Jack Mandel, Of Counsel, Bryan Cave LLP

During his more than 30 years of practice, Jack Mandel has been actively involved in the tax structuring of joint ventures and real estate related transactions. He has designed tax efficient structures in transactions involving real estate funds, REITs and hedge funds. He has significant experience in the unique income tax concerns of tax exempt investors, including unrelated business taxable income. He has counseled real estate families on tax efficient succession strategies and the division of real estate assets. He has represented foreign clients investing in the U.S. He has been heavily involved in the income tax aspects of debt restructurings and workouts. He has worked closely with clients on Section 1031 like kind exchanges and other disposition strategies. He regularly counsels clients on tax issues related to limited liability companies, partnerships and S corporations. He also has extensive experience with the New York State and City transfer taxes, mortgage recording tax and other state and local taxes.
Mr. Mandel has served on various ad hoc bar association and real estate industry committees. In addition, he has lectured and written about real estate-related tax matters.