Investing in U.S. Real Estate as a Non-U.S. Resident?
Structure Matters.

Unlock the full potential of your U.S. real estate investments with smart tax and legal structuring.

Why Use an Offshore Holding Company?

Protect your wealth and plan tax-efficiently. Non-U.S. investors often benefit from holding U.S. real estate through foreign corporations or offshore trusts designed to:

  • Mitigate U.S. estate tax exposure (which can be up to 40% on U.S.-situs assets).
  • Limit liability and shield personal assets.
  • Enhance privacy and facilitate succession planning.

🛡️ Example: A foreign investor holding property directly may be subject to U.S. estate tax, while owning it through a well-structured foreign entity may legally avoid it.

Defer Capital Gains Tax

You may be eligible to defer U.S. capital gains tax by reinvesting proceeds from one investment property into another through a like-kind exchange under IRC §1031:

  • Applicable to U.S. real property held for investment.
  • Must comply with timelines (45-day identification, 180-day closing).
  • Requires use of a Qualified Intermediary.

📌 Important: Holding structures must be properly set up to qualify for 1031 benefits.

A Tax-Efficient Strategy

Short-term rentals (like Airbnb) can offer active business treatment rather than passive rental income, resulting in:

  • Eligibility for deductions (depreciation, interest, repairs).
  • Potential exemption from the default 30% withholding under FDAP.
  • Effective connection with a U.S. trade or business (ECI), allowing net-income taxation at graduated rates with deductions.

💡 Smart structuring may reduce or eliminate withholding taxes and increase tax efficiency.

What It Is—and How It Can Be Avoided

Under the Foreign Investment in Real Property Tax Act (FIRPTA):

  • Buyers must withhold 15% of the gross sale price when purchasing U.S. real estate from a foreign person.
  • Applies even if the seller has little or no gain.

With the right structuring—such as owning property through a U.S. corporation or certain types of foreign entities—you may avoid FIRPTA withholding entirely, or significantly reduce it through a withholding certificate.
📎 Reference: IRS FIRPTA Guidelines

Set yourself up for long-term success with strategic legal and tax planning. Contact us to:

  • Select the ideal entity type for your goals
  • Structure around FIRPTA, estate tax, and withholding
  • Optimize short-term rental income treatment
  • Execute compliant 1031 exchanges

We have several specialists to serve you in the best way possible.

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Drummond is much more than an advisory an accounting a consulting a strategic partner |

Drummond Advisors was founded with the mission of meeting the needs of companies operating in Brazil and the United States, building bridges that connect entrepreneurs to new markets, new business partners, new employees, and new investors in foreign territories. Today, Drummond helps companies from anywhere in the world enter the United States, facilitating the internationalization of businesses in a strategic and secure manner.

Drummond believes that it is not enough to simply open a company in another country: it is necessary to internationalize your business, which goes far beyond establishing a legal entity in a new territory. To take this important step in your company’s history with confidence and security, it is necessary to plan, understand the impacts of the operation, and mitigate accounting, legal, and tax risks.  

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