Foreign nationals owning U.S. real estate face complex tax obligations, including estate, capital gains, and gift taxes. Whether you own residential property or commercial real estate, a professional appraisal is essential for IRS compliance and avoiding costly penalties. REIS Group provides expert estate appraisals and commercial property appraiser services to help foreign investors meet federal tax requirements.

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1. U.S. Estate & Gift Taxes for Foreign Property Owners

Estate Tax Implications

Unlike U.S. citizens, foreign nationals receive only a $60,000 estate tax exemption, with the remainder taxed at rates up to 40%. Without accurate estate valuation, executors risk overpaying estate taxes or facing IRS audits.

A professional estate appraisal from REIS Group establishes the fair market value (FMV) required for IRS Form 706-NA (United States Estate Tax Return for Nonresident Aliens). Our defensible valuations ensure:

• Accurate tax reporting to the IRS
• Prevention of overpayment on estate taxes
• Compliance with federal estate tax laws

Whether the estate includes luxury condos in Manhattan or multi-family rental properties, our estate valuation services provide the documentation needed for probate and tax filings.

Gift Tax Considerations

Gifting U.S. real estate to family members or transferring property ownership may trigger gift tax liabilities up to 40%. The IRS requires precise FMV documentation on IRS Form 709 (United States Gift Tax Return) to assess tax obligations.

REIS Group’s estate appraisals ensure:

• Proper valuation of gifted properties
• Minimized risk of IRS disputes
• Protection from penalties due to undervaluation

 

2. Capital Gains Tax on U.S. Property Sales

Importance of Accurate Appraisals

When foreign nationals sell U.S. real estate, capital gains tax is calculated based on the difference between the sale price and cost basis. An outdated or inaccurate valuation can lead to:

• Overpayment of capital gains taxes
• IRS audits and disputes
• Missed opportunities for tax savings

For commercial property owners, hiring a qualified commercial property appraiser is critical. REIS Group provides comprehensive valuations for:

• Office buildings
• Retail centers
• Multi-family apartment complexes
• Industrial warehouses
• Mixed-use developments

Our appraisals establish defensible cost basis and FMV, protecting you from unnecessary tax liabilities.

 

FIRPTA Withholding Requirements

Under the Foreign Investment in Real Property Tax Act (FIRPTA), the IRS withholds 15% of the gross sale price when foreign nationals sell U.S. real estate. However, this withholding can be reduced or eliminated with proper documentation.

A certified commercial property appraiser from REIS Group can help you:

• File IRS Form 8288-B to reduce withholding
• Prove a lower taxable gain through accurate appraisals
• Receive faster refunds from the IRS

For example, if you sell a commercial building for $2 million but your capital gain is only $200,000, FIRPTA withholding would be $300,000 (15% of $2M). With our appraisal documenting the actual $200,000 gain, you can reduce withholding significantly.

3. Gift Tax Compliance for Real Estate Transfers

Foreign nationals transferring U.S. property to family members, trusts, or business entities must report the transaction on IRS Form 709. An estate valuation ensures:

• Accurate FMV reporting
• Confirmation of gift tax obligations
• Prevention of future IRS disputes

REIS Group provides estate appraisals that withstand IRS scrutiny, protecting clients from penalties and ensuring smooth wealth transfers across generations.

 

4. Tax Reporting & Compliance for Foreign Investors

Foreign nationals need professional appraisals for various tax-related purposes:

Rental Property Taxes

If you own rental properties in the U.S., accurate appraisals are essential for:

• Establishing depreciation schedules (commercial properties can depreciate over 39 years)
• Property tax assessments and appeals
• Fair market value adjustments for tax returns

A certified commercial property appraiser ensures your rental income properties are valued correctly for federal and state tax purposes.

 

Foreign-Owned Asset Reporting

Many countries require their citizens to report foreign-held assets. For example:

• Canada: Canadian residents must report U.S. real estate on Form T1135
• United Kingdom: UK citizens must declare overseas property to HMRC
• Australia: Australian tax residents must report foreign assets on their tax returns

Managing Director, Donald Daly, A professional estate valuation or commercial real estate appraisal from REIS Group provides the documentation needed to comply with both U.S. and international tax authorities.

 

5. Why Choose REIS Group for Foreign National Appraisals?

REIS Group specializes in serving foreign investors with:

• 30+ years of appraisal experience
• IRS-compliant estate appraisals and estate valuations
• Certified commercial property appraiser services across all 50 states
• Expertise in FIRPTA, estate tax, and gift tax regulations
• Defensible reports that withstand IRS audits
• Multi-state coverage for residential and commercial properties

Our team understands the unique challenges foreign nationals face when navigating U.S. tax law. We provide:

• Clear, defensible valuation reports
• Timely delivery for tax filing deadlines
• Expert consultation on complex estate and commercial property matters

Quick Questions

Q: Do foreign nationals need an appraisal for U.S. estate tax?
A: Yes. Foreign nationals must file IRS Form 706-NA and provide estate appraisals to determine fair market value for estate tax purposes.

Q: How does FIRPTA affect foreign property sellers?
A: FIRPTA requires 15% withholding on sales. A commercial property appraiser can help reduce this through proper valuation on Form 8288-B.

Q: What’s the difference between estate appraisals and estate valuations?
A: The terms are often used interchangeably. Both refer to determining fair market value for tax, legal, or estate planning purposes.

 

Conclusion: Protect Your U.S. Real Estate Investments

Foreign nationals must navigate complex U.S. tax obligations that require professional appraisal services. Whether you need estate appraisals for inheritance planning or a commercial property appraiser for investment sales, REIS Group delivers IRS-compliant valuations that minimize tax liabilities and prevent costly disputes.

Don’t risk penalties or overpayment—get a professional appraisal today.

If you own U.S. real estate as a foreign national, contact REIS Group for:

• Estate appraisals and estate valuations for Form 706-NA compliance
• Commercial property appraiser services for FIRPTA and capital gains tax
• Expert guidance on gift tax, rental property depreciation, and international reporting

Contact Us today to get started