What are the tax implications for a foreign property investor?

Asked by Lawrence Wan, Seattle, WA Fri Apr 25, 2014

I am based in China and considering to invest in property in Seattle. What are the taxes one must pay that impacts return rates? Further, what additional tax does an overseas investor need to pay?

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Kary Krismer’s answer
Kary Krismer, Agent, Renton, WA
Fri Apr 25, 2014
I'm not 100% positive, but I think FIRPTA just deals with withholding, not the ultimate liability. So the basis would still be the acquisition cost.

I would agree with Ron about consulting a tax professional, probably both here and in your country of citizenship (or at least find one that knows both countries).
1 vote
Hi Kary and Rons, appreciate the advice and I have been enquiring China with USA experience accountant but could not locate one. Do you have any referrals for local Seattle accountants with foreign investor experience? I am a simple investor looking to dip my feet in the local property market soon. Appreciate all your assistance.
Flag Mon May 5, 2014
Don't get me wrong--FIRPTA is a great point--especially since I'm not 100% clear on how they deal with paying secured debt. The OP needs to know about that and not just have it sprung on them at the time of closing a sale. I just don't think it's the answer to how much tax will be due in the end (as opposed to being withheld). Again though, it's not an area I've dealt with, so I'm not 100% sure.
Flag Sat Apr 26, 2014
@ Kary - We are probably splitting hairs here but, It does deal with witholding (Which is a liability) but as I stated, the liability (Tax) to withold applies upon disposition of the property. Tax payments (witholding upon sale) will impact his return upon disposition.
Flag Fri Apr 25, 2014
Ray Akers, Agent, Seattle, WA
Sun Apr 27, 2014
It's best to seek the opinion of a tax attorney on this issue. Whether buying or selling real estate as a foreign investor, there have been changes in the laws in recent years. This forum is helpful for buyers and sellers, but when you have specific legal & tax questions, it's always best to seek a qualified professional. Good luck.
1 vote
Thanks for the advice Ray. As mentioned below, do you have any relevant accountants can refer? English speaking is fine for me though time zones need to be flexible for some phone calls. Appreciate all your assistance.
Flag Mon May 5, 2014
RonS, , Concord, CA
Fri Apr 25, 2014
Your tax basis will be determined upon sale (Google FIRPTA), not on acquisition. You will pay the normal property taxes associated with property ownership but outside of that, should have no different tax basis than anyone else in or out of the country.

Consult a U.S. tax professional for anything beyond an opinion.
1 vote
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