All Topics / Overseas Deals / Paying tax on American Property.

Viewing 14 posts - 1 through 14 (of 14 total)
  • Profile photo of ArchnicArchnic
    Participant
    @archnic
    Join Date: 2009
    Post Count: 11

    Hi all, hope you can help.

    My investment partner and I have several properties in Syracuse, NY. Its coming up to tax time and we're trying to work out what to do with paying tax. I know that you pretty much lose 30% standard unless you make the choice to treat your income as a business, that being said, I have some questions:

    1. If you want to just lose the 30% do you still have to fill out a form/submit anything (and if you do is it f1040nr)? The IRS website is surprisingly unclear on the matter.
    2. Can anyone relate their experience claiming deductions (ie treating their investment as a business?) and doing it themselves? Can you confirm what forms need to be filled out and is it easy?
    3. The best course of action, of course, would be to get an accountant for our American income. Any opinions on getting one based in Australia v USA.
    3.a. Leading on from the last question, any recommendations for accountants that can help us either online, in Brisbane or Syracuse New York? Preferably ones that won't break the bank :)

    Thanks all,

    Nick

    ps. On a different note, for those reading this post because they're trying to work out USA tax, just as I am, this is a great place to start – it got me up to the questions I'm asking now:  http://www.irs.gov/businesses/small/international/article/0,,id=96477,00.html

    Profile photo of djjkdjjk
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    @djjk
    Join Date: 2010
    Post Count: 87

    Archnic

    I read your post with interest and thought id have a go at some of your queries.  I have recently purchased some units in Jamestown, NY and am an acct in oz. 

    1. I believe you would be required to complete a US tax return regardless of whether you are holding the property through an LLC, C Corp or your own name.  Of course, you SHOULD be able to claim any tax back on your return in oz via foreign tax credits.  Dont know which form though sorry.  I havent held my property for the whole tax year yet. 

    2.  You can claim any deductions reasonably incurred in earning your assessable income.  Anything incurred in relation to your property in the US is deductible, as long as its not a capital improvement (which gets added to your cost base).  Even travel expenses if the sole purpose is to check on the properties.  Plenty of info on the ato site re this.   You can negatively gear the investment on your oz tax return.  I am not sure if neg gearing is allowed in the US though?  Something i need to research.

    3. You should perhaps look at getting a US acct the first time you do your US taxes.  Just to ensure that everything gets setup correctly.  I cant help with Syracuse, but Al Suchar in Jamestown NY came highly recommended to me.  I havent used his services yet.

    PM if youd like to chat.   It would be good to exchange some info with another oz investor exploring the ny market.

    Cheers
    Josh

    Profile photo of Nigel KibelNigel Kibel
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    @nigel-kibel
    Join Date: 2005
    Post Count: 1,425

    Clearly you need to have an accountant in the United States. You are earning money there and will need to lodge a tax return. You should also be buying properties in an LLC or another suitable structure. You should seek advise from a suitably qualified accountant. I have a great one but they are in Texas.

    Nigel Kibel | Property Know How
    http://propertyknowhow.com.au
    Email Me | Phone Me

    We have just launched a new website join our membership today

    Profile photo of ArchnicArchnic
    Participant
    @archnic
    Join Date: 2009
    Post Count: 11

    Thanks for the help guys – both comments have good advice.

    Ambosh I'd love to chat but you don't seem to have the feature set up – however you can email me by clicking on my name and going to my contact page… I think…

    Nigel I agree that I'm going to need an accountant in the US – preferably in Syracuse. It's just trying to find one that's the problem – we're trying to get one that's separate (ie not working with) our lawyers / rental agent over there for piece of mind.

    So…. anyone that does know of someone reputable in Syracuse feel free to let me know…

    Nick

    Profile photo of mikeyp17mikeyp17
    Member
    @mikeyp17
    Join Date: 2010
    Post Count: 1

    Hi Nigel,

    I'm looking to invest in US properties in the near future and would like to start building a good contacts list. My fiancee is from Dallas and i'll be travelling there fairly regularly. As such, it'd be great to get the contact details of the accountant that you know in Texas. Many thanks.

    Profile photo of rlillycroprlillycrop
    Member
    @rlillycrop
    Join Date: 2010
    Post Count: 42

    If you find the accountant/CPA route a little expensive (like I did) you can always get TurboTax. I use TurboTax Home and Business and the question and answer format is really easy to use. It completes all the relevant forms for you along with any state returns. The only manual process is that it doesn't automatically produce a 1040NR form, but it is very easy to take the information off the 1040 it produces and put it on the 1040NR.

    Profile photo of Nigel KibelNigel Kibel
    Participant
    @nigel-kibel
    Join Date: 2005
    Post Count: 1,425

    T. Van Alston, CPA
    Partner
    Padgett, Stratemann & Co., L.L.P.
    100 N.E. Loop 410, Suite 1100
    San Antonio, Texas 78216
    Telephone: (210) 828-6281, Ext. 1503 ~ 1-800-879-4966
    Direct Line: (210) 253-1501 ~ Mobile: (210) 313-0814
    Fax: (210) 828-8606
    Email: [email protected]
    Web Page: http://www.padgett-cpa.com

    This is a great account

    Nigel Kibel | Property Know How
    http://propertyknowhow.com.au
    Email Me | Phone Me

    We have just launched a new website join our membership today

    Profile photo of Dog with a BoneDog with a Bone
    Participant
    @dog-with-a-bone
    Join Date: 2010
    Post Count: 2

    I visited US last year, found a decent property manager.  Bought several cheap houses that have been rehabbed under her supervision, tenants found before work completed.  However, the tax side is a nightmare.  I was advised to put houses in an LLC, did that, now I am informed that, I will be taxed in Aust, as well as US because they consider I am living here and managing the Company from here.  Plenty of accountants in US  do not understand tax treaty with Aus and why should they.   Likewise there are a few US trained accountants here that know both sets of rules.  Some also do US tax returns from here.
    How do I find one that knows both countries' tax rules and can give good plain advice, without me worrying that I will get a $50K tax bill 3 years later, all because sometime didn't tick the right box now.

    I am not sure if I have posted this in the right section, I have just joined up.    Can anyone can help point me in the right direction?????????

    Profile photo of djjkdjjk
    Participant
    @djjk
    Join Date: 2010
    Post Count: 87
    Dog with a Bone wrote:

    I visited US last year, found a decent property manager.  Bought several cheap houses that have been rehabbed under her supervision, tenants found before work completed.  However, the tax side is a nightmare.  I was advised to put houses in an LLC, did that, now I am informed that, I will be taxed in Aust, as well as US because they consider I am living here and managing the Company from here. 

    While you do actually get taxed in both countries on your income earnt in the US, any you will get a credit on your US tax paid when completing your Australian tax return.  Net effect is you only get taxed once.  As far as oz tax goes – you get taxed in the year that you earn the income (regardless of when you convert it or bring it home to oz).   Hope that makes sense. 

    Suggest getting a US tax accountant to help you do the tax for your LLC and an oz acct for here.  You cant get away with having one for both.

    Profile photo of MakingTheJumpMakingTheJump
    Member
    @makingthejump
    Join Date: 2010
    Post Count: 7

    Hi guys,

    Our plan is to source an Australian accountant with knowledge on how to do US tax. A friend of a friend is doing it this way although his accountant is quite exy… $900 although we would rather have an Auusie do our accounting, simply for peace of mind, because the Oz taxation system is so complicated.

    A quick search of websites like the Institute of Chartered Accountants in Australia – http://www.charteredaccountants.com.au – comes up with plenty of Aussie accountants with international experience and although it involves a fair bit of ringing around will be worth it. From my research and anecdotal evidence from people I know who also investing in the US property market, the statement that you need an accountant in the US is simply not true. Hope this helps!

    Cheers

    Profile photo of TassieJHTassieJH
    Participant
    @tassiejh
    Join Date: 2010
    Post Count: 41
    Archnic wrote:
    Hi all, hope you can help.

    Nick

    ps. On a different note, for those reading this post because they're trying to work out USA tax, just as I am, this is a great place to start – it got me up to the questions I'm asking now:  http://www.irs.gov/businesses/small/international/article/0,,id=96477,00.html

    Investigated the link supplied by Nick and came across this futher detail specifically for rental property. "Topic 414 – Rental Income and Expenses"   http://www.irs.gov/taxtopics/tc414.html

    Profile photo of jeff2tractjeff2tract
    Member
    @jeff2tract
    Join Date: 2010
    Post Count: 30

    Hi Archanic,

    I just joined today, I am in the process of setting up a business called invest USA, we are advising Aussi investors on property investment opportunities that currently exist in the USA. Concentrating on 3 area’s in the USA. I have 2 accountants that are based in Sydney that are both experienced in Australian and USA tax laws. If you would like there details I would be happy to email them to you

    Profile photo of TassieJHTassieJH
    Participant
    @tassiejh
    Join Date: 2010
    Post Count: 41
    jeff2tract wrote:
    Hi Archanic, I just joined today, If you would like there details I would be happy to email them to you

    Jeff2tract,

    I would be interested in making contact with your accountants for some services.

    Please open your profile up to accept email contact.

    thanks,

    TassieJH

    Profile photo of jeff2tractjeff2tract
    Member
    @jeff2tract
    Join Date: 2010
    Post Count: 30

    Hi TassieJH

    I have opened up my profile to receive emails. If not you can email me [email protected]

    I can be contacted there.

    Jeff2tract

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