FIRPTA, 1031 Exchanges, and Foreign Investors w/ Dave Foster

FIRPTA, 1031 Exchanges, and Foreign Investors w/ Dave Foster

There are a lot of benefits available to real estate investors, both foreign and domestic, through the 1031 Exchange. The ability to defer all taxes in real estate transactions is a gift from the IRS. What happens when one party in the transaction is a not a US Citizen? How does that affect the transaction? How does that affect the 1031 Exchange?

The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) states that if you purchase real estate from a non-US Citizen, or “foreign person”, you as the buyer are required to withhold 10% of the amount realized from the sale. In this episode of Skyline Views, I sit down with a seasoned and highly educated Qualified Intermediary to discuss FIRPTA and its relationship with 1031 Exchanges. What should you be aware of as a US Citizen buying from a foreign investor? What should you as a foreign investor be aware of planning out your investment strategy in the US?

My guest Dave Foster is a degreed accountant, QI, and serial real estate investor. He has decades of experience helping investors like you maximize their returns through tax saving strategies.

Key Points:

Dave recounts how he got his start (0:43)

What is FIRPTA? How does it affect foreign investors? (4:30)

Buyer’s liability in buying from non-US Citizens (7:16)

1031 Exchange statute that affects FIRPTA (9:31)

How the simultaneous 1031 Exchange benefits foreign investors (11:36)

Market that FIRPTA and foreign investment has created in the United States (13:15)

Calculations foreign investors need to do ahead of time (15:24)

Calculating benefits and fees between principal, profits, and returns (18:24)

Resources:

Dave’s Site – https://www.the1031investor.com/

IRS Video on FIRPTA – https://www.irsvideos.gov/Individual/education/FIRPTA

Is your real estate portfolio running like a well-oiled machine? Do you know how you stack up? Find helpful resources here – http://mrcdmills.com/resources/

Learn more about The Haney Company here – https://www.thehaneycompany.com/

Know any new parents? Order them a copy of Legacy 101 here – https://www.amazon.com/Legacy-101-Practical-Christopher-Mills/dp/0692684050

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Passion is an understatement when it comes to Christopher Mills and his desire to help families and family owned businesses. Chris has over 15 years of real estate experience as an investor, and has experience as a loan originator, property manager, and an agent. At The Haney Company, Chris specializes in working with individuals and organizations who have or desire real estate holdings and helping them map out and achieve their financial goals. His real estate experience helps him address the complexities and opportunities unique to real estate investors. His specialties include alternative investments, 1031 Exchanges, and liquidity solutions. Working closely with members of The Haney Company, attorneys, and CPAs, his clients are able to benefit from a comprehensive approach to each individual situation. Chris is the author of Legacy 101: A Practical Guide. He lives in Northern Virginia with his wife and 3 children. In his free time, he enjoys gardening, hiking, cooking, and classical music.