ALERT: Nonresident Alien U.S. Real Estate Activities Targeted by IRS Audit Campaign

If you are a nonresident alien investor thinking of purchasing Florida real estate, you should seek appropriate legal and tax advice with respect to the acquisition, operation and disposition of U.S. real property interests.

As announced by the IRS Large Business & International Division on October 5, 2020, a new audit campaign will focus on nonresident aliens receiving rental income from U.S. property and the requirement to comply with the related Internal Revenue Code’s reporting and filing requirements.

On the State level, while there are no taxes imposed by Florida unique to foreign owners for owning real estate, foreign investors and entities are subject to the same taxes as residents who receive rental income from property they own in Florida.

This new campaign comes on the heels of another audit campaign announced Sept. 14, 2020, targeting the noncompliance of nonresident aliens in connection with the withholding of tax and reporting obligations on the disposition of U.S. real property interests under the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA). The takeaway is that the IRS is focusing on nonresident alien noncompliance in this area, where both initiatives are geared to enhance compliance through targeted, issue-based examinations, education and guidance.

If you’re a nonresident alien with a Florida real estate purchase plan, give us a call @ 305-728-5331 to set up your consultation with our team.



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