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FAQ's - United States


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As a non-resident individual in the US, do I need to file a U.S. tax return?

If you generate income in the U.S. then you will have an obligation to declare this income before the Inland Revenue Service (IRS).

Are there any restrictions on non-residents when purchasing property in U.S.?

In general there are no restrictions placed on people from outside the U.S. buying property.

Which are the additional purchase costs in the U.S.?

The initial costs associated with buying property in the U.S. typically vary between 3% and 5% of the property purchase price:

 

  • Title insurance – this is a contractual obligation that protects against losses that occur when title to a property is not free and clear of defects (e.g. liens,  encumbrances and defects that were unknown when the title policy was issued). The terms of the policy define what risks are covered and what risks are excluded from coverage. The title insurer will reimburse you for losses that are covered, up to the face amount of the policy, and any related legal expenses. This protection is effective as of the issue date of the policy and covers defects arising prior to your ownership. Title companies issue policies on all types of real and personal property.
  • Real Estate Tax – the arte of Real Estate Tax varies state to state and will depend on whether the taxpayer is a U.S. tax resident or nonresident.

Shall I be treated as non-resident alien or resident alien?

Non-residents in the U.S. are classified as nonresident aliens and resident aliens. If someone is an alien (not a U.S. citizen), he is considered a nonresident alien unless he/she meets one of the two tests:

 

  • Green card test - A person is a resident for tax purposes if he is a lawful permanent resident of the United States at any time during the calendar year. This is known as the “green card” test.
  • Substantial presence test – A person will be considered a U.S. resident for tax purposes if he meets the substantial presence test for the calendar year. To meet this test, he must be physically present in the United States on at least 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that.

How are non-resident aliens and resident aliens taxed?

Resident aliens generally are taxed on their worldwide income, the same as U.S. citizens. As a non-resident alien you are only obliged to declare whatever income was derived in the U.S. and on certain income connected with the conduct of a trade or business in the United States.

You should check with your home country to determine what your tax obligations are concerning worldwide income.

 

Am I obligated to apply for US tax number if I’m treated as non-resident alien?

Non-resident aliens shall apply for an Individual Taxpayer Identification Number (ITIN). An ITIN is a tax processing number, issued by the Internal Revenue Service (IRS). It is a nine-digit number beginning with the number “9”, has a range of numbers from “70” to “88” for the fourth and fifth digits and is formatted like a Social Security Number (SSN) (i.e. 9XX-7XXXXX). The ITIN is only available to individuals who are required to have a taxpayer identification number for tax purposes but who do not have, and are not eligible to obtain a social security number from the Social Security Administration (SSA).

 

What methods of taxation do they use in the U.S.?

There are two methods of Income taxation in the U.S.:

 

  • Cash basis method - applies when rental income is counted as income with expenses deducted as they are received.
  • Accrual method – taxpayer generally reports income when he earns it, rather than when he receives it. Taxpayer generally deducts his expenses when he incurs them, rather than when he pays them.

 

What can I deduct as expenses against my U.S. rental income?

There are a number of allowable expenses which can be offset against your rental income.


  • Pre-rental expenses
  • Depreciation
  • Repairs
  • Improvements
  • Travel expenses
  • Cleaning and  Maintenance
  • Insurance
  • Tax return preparation fees

What are the US income tax rates?

The U.S. income tax rates vary and are applied on a sliding scale starting at 10% on incomes up to $8,350 and over 35% on incomes in excess of $372,950.

When do I need to file my U.S. tax return?

The deadline for filing a U.S. income tax return is April 15th. There is an automatic extension given to non-resident aliens who have until the 15th of June to file their US income tax return.

Can you open a U.S. bank account?

Yes, Property Tax International now offer assistance to property owners looking to open a U.S. bank account. The account is opened with one of the worlds leading banking institutes and provides complete online access allowing the user to access and manage their U.S. funds from anywhere on the planet.

 

Click on the relevant link below to learn more about your tax obligations in the country of purchase:

Canadian Property TaxCanadian Property TaxPolish Property TaxPolish Property Tax
French Property TaxFrench Property TaxPortuguese Property TaxPortuguese Property Tax
German Property TaxGerman Property TaxSpanish Property TaxSpanish Property Tax
Hungarian Property TaxHungarian Property TaxUK Property TaxUK Property Tax
Irish Property TaxIrish Property TaxUSA Property TaxUSA Property Tax

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