With the optimism in New York City’s real estate market, it is no surprise that foreign real estate investment is expected to grow in 2017. After all, more commercial property is becoming available (and more valuable). This cycle continues to attract buyers coming from abroad (primarily through foreign investment funds).
With that, it is important for foreign investors to know the important steps necessary to secure real estate in New York. This post will highlight a few of them.
Form an LLC – Foreign investors should know the basics of a limited liability company. Given the climate of litigation in the U.S. it is important to protect an unwitting investor from unforeseen liability.
Obtain an EIN for the LLC – An employer identification number is required for opening a U.S. based bank account for the company, and to identify it for tax purposes.
Determine how rental income will be classified – Foreign investors must also consider whether the income generated from the property will be “effectively connected” or “not effectively connected” to a trade of business based in the U.S. This distinction will affect how such income will be classified for tax purposes.
Open a U.S. bank account – This is fairly straightforward, but the preceding actions should be taken.
If you have further questions about the steps foreign real estate investors must take to acquire or need guidance on the legal decisions that must be made before undertaking an investment, an experienced New York City real estate attorney can advise you.