The Structure Question Every International Investor Faces
You’ve decided to invest in US real estate. You’ve selected your market. You’ve been pre-qualified for a DSCR loan through America Mortgages. Now comes the question that trips up more international investors than any other:
How should you hold the property?
Personal name? US LLC? Foreign LLC? Delaware trust? US corporation? Each has different implications for:
- US income taxes
- US estate taxes
- Legal asset protection
- DSCR loan eligibility
- Privacy
This article provides a framework, not legal advice. Every investor’s situation is unique. America Mortgages strongly recommends consulting a qualified US international tax attorney before making ownership structure decisions.
Option 1: Personal Name
Simplest. The property is deeded directly to you as an individual.
US income tax: You file a US non-resident return (1040NR) reporting rental income and claiming deductions.
US estate tax: Non-US residents are subject to US estate tax on US situs assets (including real estate) above $60,000 at rates up to 40%. For a property worth $500,000, the potential estate tax exposure is substantial. This is the primary reason most sophisticated international investors do NOT hold US real estate in personal name.
DSCR eligibility: Standard programs available. Personal name lending is the default.
Asset protection: Minimal. Your US property can be reached by creditors of your personal estate.
Privacy: Public record. Property ownership in your personal name is searchable through US county recorder databases.
Recommended for: Investors with US estate tax treaty protection (some countries have treaties that significantly increase the exemption) or investors with US real estate below the estate tax threshold who prioritise simplicity.
Option 2: US LLC (Most Common for International Investors)
The LLC (Limited Liability Company) is the most popular ownership structure for foreign national US real estate investors. Here’s why:
Asset protection: The LLC separates the real estate asset from your personal estate. Creditors of the LLC can reach the property; creditors of you personally generally cannot reach the LLC’s assets (in a properly structured, well-maintained LLC).
US estate tax treatment (debated): Some US international tax attorneys argue that foreign nationals who hold US real estate through a US LLC — owned by a foreign entity — have converted the US situs asset (the real estate) into a foreign situs asset (the foreign entity’s ownership of the LLC). If successful, this eliminates US estate tax exposure. This is a complex and contested area of law. Qualified specialist tax advice is essential.
Privacy: The LLC’s membership (ownership) is not always publicly recorded, providing more privacy than personal name ownership in many states.
DSCR eligibility: Most DSCR programs lend to single-member LLCs or multi-member LLCs owned by the foreign investor. The investor provides personal guarantee as guarantor of the LLC’s loan.
Tax filing: An LLC with a foreign owner typically files a US tax return (Form 1065 or Form 8832 / 1120-F depending on elections).
Cost: State filing fees ($50–$500 annually depending on state), registered agent fees ($100–$300/year), and accounting costs for annual returns.
Recommended for: Most foreign national investors. The combination of asset protection, privacy, and potential estate tax planning makes the LLC the default choice for professionally advised international real estate investors.
Option 3: Foreign LLC or Foreign Company Ownership
Some international investors hold US real estate through a foreign entity: a BVI company, a Cayman SPV, a Singapore Pte Ltd, or a Hong Kong Limited Company.
The issue: The US FIRPTA withholding rate for entities that are not “qualified” US entities is 15% on gross sale proceeds. For entities in certain treaty jurisdictions, modified rates may apply.
The advantage: The US situs asset (real estate) is owned by a foreign entity, potentially converting it to a foreign situs asset for US estate tax purposes.
The DSCR complication: Many US DSCR lenders require US entity ownership (a US LLC or US corporation) as the borrower. Lending directly to a BVI company or foreign LLC is uncommon. The typical structure for foreign investors is: foreign entity owns a US LLC, which owns the property and is the mortgage borrower.
Option 4: US Trust Structures
Certain irrevocable trust structures (QPRTs, SLATs, family dynasty trusts) can hold US real estate in ways that mitigate estate tax exposure. These are complex, expensive to establish, and require ongoing administration, but for investors with substantial US property holdings, the estate tax savings can be transformative.
America Mortgages and trust-held properties: As detailed in Article 9 of the HNW US citizen series, America Mortgages lends to trust-held properties for both US citizens and, in some circumstances, foreign nationals.
The DSCR Loan and LLC Structure: The Practical Details
(25% mortgage section)
Standard DSCR + LLC process:
- Establish a US LLC (typically in Delaware, Wyoming, or the state where the property is located)
- Obtain an EIN (Employer Identification Number) for the LLC from the IRS
- Open a US business bank account for the LLC (for rental income and expense management)
- Apply for the DSCR loan in the LLC’s name, with you as the personal guarantor
- Title the property in the LLC’s name at closing
Why America Mortgages for LLC DSCR loans:
- Access to 150+ lender programs that accommodate foreign-owned LLC borrowers
- Experience with the specific documentation requirements for LLCs with foreign members
- Coordination with US attorneys for LLC formation and operating agreement
- Guidance on multi-state LLC considerations for investors targeting multiple markets
LLC formation in different states:
- Delaware: Most popular for liability protection, legal precedent, and flexible operating agreements
- Wyoming: Strong privacy (no public member disclosure), low fees, strong charging order protection
- Property state: Required if you want to avoid foreign LLC registration in the property state
America Mortgages coordinates with qualified US attorneys for LLC formation as part of the client onboarding process. Most foreign national investors have their US LLC formed within 1–2 weeks of engaging an attorney.
The America Mortgages Structural Advisory Service
Before funding any DSCR loan, America Mortgages’ advisory process includes:
- Ownership structure consultation: Review of the investor’s situation and recommendation of appropriate structure (personal, LLC, or other)
- US attorney referral: To qualified international real estate attorneys in the relevant state(s)
- Tax advisor referral: To US-qualified international tax specialists familiar with the investor’s home country
- DSCR program matching: To the lender programs that best accommodate the recommended structure
America Mortgages does not provide legal or tax advice. The advisory service is a coordination and referral function, connecting investors with the right specialists for their specific situation.
FAQ: US Real Estate Ownership Structure
Q1: Can I own US real estate in my personal name if I live in Singapore?
A: Yes, but the US estate tax exposure for personal name ownership is significant. Strongly consider LLC or other structure with professional advice.
Q2: What is a single-member LLC for DSCR purposes?
A: An LLC with one owner (you). Taxed as a disregarded entity unless you elect otherwise. Standard DSCR loan structure for individual foreign national investors.
Q3: How long does it take to set up a US LLC?
A: Delaware or Wyoming LLC formation takes 1–5 business days (expedited service available for 24-hour formation). EIN (tax ID) takes 1–3 days for online application by foreign nationals.
Q4: Does the LLC need its own bank account before closing?
A: Most DSCR lenders require an active business bank account for the LLC before funding. Account opening for foreign-owned US LLCs takes 1–4 weeks. America Mortgages advises on timing management.
Contact America Mortgages
Website: AmericaMortgages.com | GMG.asia
US: +1 830-217-6608
Singapore: +65 8430-1541
Email: [email protected]
Call: +1 (845) 583-0830
