Thomas C. Roberge & Company

TAX BENEFITS

FOR FOREIGN LANDLORDS

February 13, 2006

St. Petersburg and Sarasota

Telephone: (727) 822-9393

The rental of U.S. real estate by foreign property owners offers a special opportunity to accumulate tax benefits to minimize their U.S. tax liability.

Many people (especially visitors) have a fear of tax authorities and the filing of income tax returns. This is only natural. However, there are unique tax rules and elections available to these individuals, which, if properly utilized, can result in tax losses which can be carried forward and applied against the eventual gain on the disposition of the U.S. real estate.

The only way to generate these losses is by annually filing a nonresident individual income tax return to get these losses on record with the IRS. By not filing a return within certain time limits the foreign investor forfeits the benefits of all these deductions. Furthermore, by not filing the return the gross income for rents received by the foreign national or his or her rental agent is subject to a 30% tax on gross rents without the benefit of offsetting deductions. Penalties and interest are also assessed on this 30% tax.

Our firm specializes in the preparation of income tax returns and tax planning for foreign nationals. The long-term tax savings accruing can be enormous if they are properly planned for and if the nonresident income tax returns are properly prepared and the appropriate elections are made. It is not uncommon in our practice for our long-term clients to have accumulated six figure tax losses from timely filing prior years income tax returns and applying these losses against the gains on their real estate sales.

Please contact us if you have questions or would like our assistance in planning and filing U.S. income tax returns for real estate rentals.

Internal Revenue Service Circular 230 Disclosure – You are hereby advised that any tax advice contained in this newsletter is not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or to support the marketing of any tax transactions or matters addressed herein.