Avoiding the Withholding Tax: Foreign Owners
Because of this potential tax liability, 1836 Property Management requires that foreign investors have or immediately apply for the Individual Taxpayer Identification Number or ITIN W-7 Form. Once this number has been provided to 1836 Property Management we can disperse the funds without any withholding.
W-8ECI Form. Nonresident aliens and other foreign Investors must annually complete the Form W-8ECI, which certifies a foreign person Income Is Effectively Connected With the Conduct of a Trade or Business in the United States. (Real Estate). See below for clarification on two line items.
Part I, #3: This line is for the foreign person to use if they have an LLC that is receiving the rental payments. If they have not formed an LLC then this line is blank.
Part I, #6: This is for the foreign person’s U.S. address if they have one. It is not the address of the rental property. IRS asks this question in order to know if there is a U.S. address where they can send correspondence to the foreign person if necessary. It is ok and very common if this item is blank. Many non-U.S. citizens will not be located in the U.S. or have a U.S. business address of their own.
1836 Property Management will collect the rent from the tenants, pay the management, leasing, maintenance, HOA, and related costs with the rental income, and we will remit the balance to the owner. We are very familiar with International Investment laws.
Once tax time rolls around 1836 will prepare a Form 1042 for delivery to the investor. This form will outline the details necessary for the foreign person to file their taxes properly.