In the exclusive webinar, Tax-Smart Strategies for U.S. Real Estate Investors (Non-Resident), international property investors gained a comprehensive overview of how to structure their U.S. real estate investments for maximum tax efficiency and long-term growth.
Robert Chadwick, CEO of America Mortgages, and Thomas Carden, International Tax Director at American International Tax Advisers, provided practical, experience-driven insights on how non-resident investors can use the U.S. tax code to their advantage—reducing withholding tax, maximizing deductions like depreciation, and utilizing refinancing and 1031 exchanges to defer or avoid capital gains.
This session also addressed common investor questions, including the benefits of using an LLC, navigating state-specific tax implications, and how to qualify for U.S. mortgages while living abroad.
Thomas Carden (TC) and Robert Chadwick (RC) answered a variety of questions, providing clear and concise responses to help investors make informed decisions, with remarks edited for clarity and brevity.
Q: Are some states better for rental properties than others?
TC: Yes. State taxation and regulation vary widely. For instance, California and New York impose high individual tax rates and have restrictive deduction policies. In contrast, Florida and Texas offer no state income tax and business-friendly environments. Nevada is also attractive for its favorable tax laws and strong inward migration. Thomas personally prefers investing in Texas (e.g., San Antonio) and Nevada (Las Vegas).
Q: What happens if I want to sell my property?
TC: Selling a U.S. rental property may lead to capital gains tax (typically 15–20%) and depreciation recapture. A more tax-efficient strategy is to refinance and extract equity while retaining ownership. Alternatively, a Section 1031 Exchange lets you defer all taxes if proceeds are reinvested in another qualifying property.
Q: I’m already pre-approved for a loan with you guys. Any help in finding a property to buy in the USA?
RC: Yes. America Mortgages now partners with NewZip, a concierge real estate platform that connects foreign buyers with top realtors. Buyers who use NewZip and America Mortgages receive a 0.50% rebate (usable for closing costs, rate buy-down, or as cash back at closing).
Q: Can you handle both U.S. and Canada cross-border taxation?
TC: Yes, in partnership. While U.S. taxation is handled in-house, Thomas’s firm works with a specialized Canadian tax attorney to help clients with dual filings, residency complications, and cross-border compliance.
Q: What do you think of Houston multifamily rental and San Antonio multifamily rental?
TC and RC: Thomas favors Houston for its strong rental market and Texas’s favorable tax laws. Robert notes that Canadian investors can typically access up to 75% LTV for 1–4 unit properties, allowing substantial leverage. With 1 million CAD, an investor might acquire up to 3 million USD in real estate across multiple properties.
Q: The cost of doing a tax return in the U.S. each year?
TC: The typical cost is around $600 per year for a non-resident owning a single rental property. Complexity and the number of states involved may increase fees.
Q: Is it preferable to hold property in an LLC?
TC: Not primarily for tax savings. While an LLC offers limited liability protection and potential estate planning advantages, the income still flows through to the owner. An LLC becomes more beneficial when owning multiple properties to isolate legal liability.
Q: For the Rental Coverage Program, how do I show a property’s projected rental income? Will AM help?
RC: Yes. If there is an existing lease, that’s used. If not, an appraisal with a rental schedule is obtained to estimate market rent. This value is used for qualification. The property does not need to be tenanted at closing.
Q: Tips to manage taxes if I own multiple U.S. properties?
TC: Work with a qualified U.S. tax advisor and property manager. Some expenses (like travel to visit properties) are deductible. Each state may require separate tax filings. A good property manager provides detailed accounting, which makes tax compliance and optimization easier.
Q: Can I reduce the tax I pay on rental income?
TC: Yes. Depreciation, mortgage interest, travel, repairs, and other expenses can significantly reduce or even eliminate taxable income. With planning, investors often end up cash flow positive and tax flow negative, meaning they earn income but pay no U.S. tax.
Q: What happens to taxes when I sell my U.S. property? Do I have to pay capital gains tax?
TC: Yes. You’ll face capital gains tax and must recapture depreciation. However, using a 1031 Exchange allows you to defer taxes entirely by reinvesting in a similar property. Alternatively, refinancing provides tax-free access to equity.
Q: Will owning U.S. property in an LLC lower my taxes?
TC: Usually no. The LLC structure offers legal liability protection but does not inherently lower taxes unless estate planning or special structuring is involved.
Q: I’m self-employed in Dubai. What documents do I need to get started with a mortgage in the U.S.?
RC:Required documents include:
- Completed loan application (online)
- Passport
- 2 months of foreign bank statements showing down payment and closing costs
No U.S. travel or credit history is needed. Pre-approval is typically issued within 24–72 hours.
Q: Can I apply for a mortgage jointly with my spouse if only one of us has income?
RC:Yes. You can apply jointly or have one spouse on the mortgage and both on the title. If using an LLC, both spouses can be listed as members depending on ownership and lender requirements
