- Real Estate
Feinstein & Partners specializes in providing advice to foreign investors on all tax and practical matters relating to foreign investment in U.S. real estate. Our experts will develop optimal investment and tax structures for investment in U.S. real estate that will enable our clients to meet their personal and business objectives. Such investment structures are designed to minimize, and in some cases even eliminate, the obligation to pay income and estate taxes associated with investments in U.S. real estate. Our services include:
- Structuring tax-efficient domestic and offshore real estate holding entities
- Creation of investment structures to minimize the federal, state and municipal income tax levied on the current operating income and gains on disposition of income generating property
- Ensuring compliance with federal, state and municipal tax laws
- Properly documenting and ensuring compliance with legal requirements in order to minimize the taxes withheld in connection with the sale of property, including the preparation of applications for a certificate of deduction of tax upon transfer of ownership (Withholding Certificates) to prevent over-withholding of tax upon transfer of the property
- Use of tax treaties to avoid double taxation
- Maintaining the investment structure’s legal documentation for the reporting year
- U.S. Business Activities
Feinstein & Partners provides inbound tax planning services to foreign individuals and companies doing business in the U.S. Our tax planning services include:
- Structuring tax-efficient U.S. inbound transactions
- Selecting tax-efficient and operationally effective legal forms of U.S. entities
- Counseling clients in connection with branch profit tax, U.S. tax withholding rules, tax treaties, establishing foreign entities, and worldwide income and U.S. tax residency issues
- Developing, drafting and reviewing business contracts
- Obtaining federal and state business licenses
- Assisting clients in establishing U.S. bank and merchant accounts
- U. S. Estate and Gift Tax Planning
At Feinstein & Partners, we assist our foreign clients with minimizing their U.S. estate tax exposure. The estate tax is a tax on the right to transfer property at the time of death. Deceased nonresidents who were not American citizens are subject to U.S. estate taxation with respect to their assets situated in the U.S. U.S.-situated assets include American real estate, tangible personal property, and securities of U.S. companies.
Unlike U.S. citizens and residents who have substantial estate tax exemptions, for a nonresident non-citizen, the applicable exemption continues to be limited to $60,000. Thus, estate taxes are due when a nonresident alien’s estate transfers U.S.-situated assets above $60,000. Currently, the top estate tax rate is 40%.
For example, Mr. X is a citizen and resident of Italy who owns a condominium in New York valued at $3,060,000. Upon death, Mr. X’s estate would be subject to the U.S. estate tax on $3,000,000. The estate tax is $1,200,000. However, with proper planning, the estate taxes for nonresidents can be substantially minimized.
Our estate tax planning services for nonresidents include:
- Tax planning for acquisition of U.S. based assets by nonresidents
- Reorganizing U.S. investments of foreign nationals using tax planning opportunities under applicable estate tax treaties and U.S. estate and gift tax laws
- Setting up efficient holding structures for U.S. based assets owned by nonresidents
- Coordinating between U.S. and foreign estate tax law with estate tax treaties to minimize taxes
- Pre-Immigration Tax Planning
Feinstein & Partners provide pre-immigration tax planning to foreign individuals planning to relocate to the U.S. Once an individual becomes a U.S. resident alien for the purposes of U.S. income taxation, he or she will be exposed to U.S. income taxes on worldwide income and estate and gift taxes on worldwide assets.
Through years of representing foreign individuals in connection with U.S. business dealings, tax planning and immigration matters, Feinstein & Partners has developed pre-immigration tax planning solutions that allow our clients to significantly reduce their exposure to U.S. federal income, gift and estate taxes upon becoming U.S. residents for income tax purposes. We individually consider different pre-immigration tax planning strategies depending on each client’s unique situation and country of origin. Our pre-immigration tax-planning strategies include:
- Accelerating income earned by an immigrating client prior to becoming a U.S. tax resident
- Accelerating recognition of foreign account receivables and other types of investment income
- Accelerating gain in appreciated assets belonging to an immigrating nonresident alien prior to becoming a U.S. tax resident – an immigrating alien should consider accelerating gain in his or her real estate assets, artwork, corporate stocks and options, and other assets
- Deferring losses until after a client becomes a U.S. tax resident; these losses can be taken after an individual becomes a U.S. resident, thereby reducing his taxable income tax basis in the U.S.
- Exploring strategies to receive a step-up tax cost basis of assets to their fair market value
For example, Mr. X purchased a property many years ago and paid $100,000 for it. On the date he plans to become a U.S. tax resident, the property is worth $1,000,000. If Mr. X does not step up the cost basis of the property before relocating to the U.S. and sell the property thereafter, his gain on the sale will be $900,000. This gain will be subject to the highest U.S. income tax rate (almost 40%). However, with proper planning, Mr. X could have paid $0 in U.S. income taxes on the gain realized from the sale of the property.