Actions to take before investing in the US
Report to US tax authorities:
Every foreign investor must report to the IRS of their intention to invest in the US
What is ITIN – Individual Taxpayer Identification Number
The ITIN number is an identification number for tax purposes only.
It does not grant the right to work in the United States, or any other benefit in the United States.
An ITIN number that has not been used for 5 consecutive years will be canceled automatically.
Opening an LLC – Limited Liability Company:
Investing in real estate in the United States is often combined with the establishment of LLC – Limited Liability Company.
An LLC is an American company established in accordance with the law of each specific state (and not the Federal Law).
In fact, LLC acts as a limited company in terms of legal liability and as a partnership in terms of taxation.
This is a company to which corporate tax does not apply and which is not subject to capital gains tax.
The company is established by partners (including the possibility of a single partner) to whom the profits are associated in accordance with the determined percentages.
Why is it preferred to list the property under LLC and not under the investor’s name?
LLC provides owners with a form of “insurance” against personal claims. In the event that a claim is filed following an incident that occurred in the areas of the property, we will first activate the insurance we have taken out to protect a third party. If the claim is in excess of the insurance amount, it will be possible to claim only what is under the LLC and not the personal capital of the investor. It is worth noting that cases like this are rare but we recommend purchasing a property under LLC.
At the time of opening the LLC, the IRS will issue the company a unique number – EIN – Employer Identification Number.
This number is a kind of “ID number” of the company and the file number of the company in the tax authority registrations.
EIN is also known as Tax ID Number
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