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I’m not a citizen but I have real property in the U.S.

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    This is a good question. Every foreign jurisdiction has a “choice-of-law” regulation that decides whether to apply its law or another jurisdiction’s law. A conflict between international laws commonly arises in the context of determining the validity /disposition of a will or trust, intestacy regulations, or in the rights of family members to a decedent’s property. Usually, a jurisdiction applies its own law to govern the real property located in its country; and usually also the law where a decedent is domiciled when he dies applies to determine the succession of a decedent’s personal property.

    However, the above statements need to be qualified because there are additionally the transfer taxes that may apply to a non-resident alien’s real property that is located in the United States.

    There are three types of U.S. transfer taxes, including gift tax, generation-skipping transfer tax, and the estate tax. These taxes apply during the life or at the death of even a non-resident alien in limited circumstances. The transfer taxation of foreign investors within the U.S. is one of the most sophisticated topics in U.S. taxation. From a policy perspective, Congress’ goal is to balance two competing objectives. On the one hand, it desires to assess and impose transfer taxation on nonresident non-citizens to a limited extent but, on the other, Congress desires to attract foreign investors by keeping these taxes minimal (it does this by creating several statutory exemptions from the U.S. transfer tax system for domestic investments by nonresident aliens). As a general matter, the U.S. transfer taxes only apply to property having a “U.S. situs” (property located in the U.S.), but even so there are several exclusions that further restrain the applicability of transfer taxes. A non-resident alien’s domicile is the single most important factor determining whether the U.S. transfer taxes will be limited in their applicability. Note, however, that the definition of “resident” for the U.S. Estate Tax differs from the definition for the U.S. Income Tax purposes.


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