I specialize in international taxation from San Diego, California. I do consultation, tax planning, and tax compliance for nonresidents who own or are planning to buy a house in the United States. Before a foreigner purchases property in the US, they should know the tax rules and requirements.
Every homeowner in the United States, regardless of citizenship, must pay property tax annually. The property tax rate is different from state to state. For example, New Jersey, Illinois, and New Hampshire have the highest property tax rates (2.47%, 2.30%, and 2.20% respectively) and Hawaii has the lowest (0.35%). In San Diego, California the base property tax rate is 1%.
Eventually, the foreign homeowner will decide to sell, gift, or bequeath his U.S.-based property. In my previous post I discussed the high 40% tax that is imposed on the gift or estate if it is owned by a non-resident. If a foreign homeowner sells his house, the IRS requires that buyers of the property withhold 15% of the amount realized on the disposition. If a state has an income tax, then the state also requires withholding. For example, California requires to withhold 3.3%.
The withholding can be refunded to the non-resident seller when Form 1040NR and a state tax return are filed. In order to file a tax return, a non-resident must have a SSN or ITIN. ITIN is Individual Taxpayer Identification Number that is only available for certain nonresidents and resident aliens who cannot get a SSN. A non-resident alien may apply for an ITIN himself or through a Certified Acceptance Agent (CAA). The original documents -- passport or other government ID-- must be sent to the IRS with the application. The processing time is about 3 months. A CAA can certify the original document so the applicant doesn`t need to send them to the IRS.
If someone you know needs an ITIN, CAA service, a withholding refund, or any other international tax issues, please feel free to contact us directly at (760) 842-7885 or by email at info@usibts.com
U.S. International Business Tax Solutions
3520 College Blvd., Suite 204,
Oceanside, CA, USA 92056
Tel: +1-760-842-7885
Fax: +1-760-683-2208
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