USA Law and Practice Contributed by: Diana Zeydel, Marc Selden, Benjamin Babcock and Brian Smith, Greenberg Traurig, LLP
may result in significant US income, withholding and transfer tax consequences. The disposition of US property by a non-citizen, non- resident person is generally subject to the Foreign Investment in Real Property Tax Act (FIRPTA). FIRPTA typically mandates the purchaser of US real property from a non-citizen, non-resident person to withhold 15% of the gross purchase price and remit such with - holding to the IRS, subject to certain statutory excep - tions and withholding certificates. Gain recognised on the sale is generally treated as effectively connected income and taxed at the applicable federal income tax rates, unless modified by an income tax treaty. Rental income resulting from rental activities that do not constitute a US trade or business is generally sub - ject to a 30% gross withholding tax unless the owner elects to treat the income as effectively connected with a US trade or business. Making this election per - mits deductions for ordinary and necessary expenses, including mortgage interest, property taxes, deprecia - tion and operating costs. Upon disposition, deprecia - tion deductions may be subject to recapture under applicable tax rules. Depending on the investor’s objectives, US real estate may be acquired through US limited liability compa - nies (LLCs) owned by foreign companies treated as corporations for US purposes or using an irrevoca - ble trust. When US persons are beneficiaries or hold powers with respect to a foreign trust, consideration must be given to the US income and wealth transfer tax effects. Beginning in 2026, real estate professionals and oth - er brokers may have additional reporting obligations when digital assets are used in real estate transac - tions, including reporting the fair market value of digi - tal assets used by buyers and received by sellers in covered closings. 1.6 Stability of Tax Laws Recent changes to the wealth transfer tax laws have made the rules “permanent”, as all so-called sunset provisions were eliminated. Bills are proposed from time to time to reduce the exemptions or to change the taxation of transactions with trusts, but none of
those have succeeded yet. The proposals that have gained traction in the past relate to the taxation of grantor trusts, whether assets owned by a dece - dent will receive an income tax basis adjustment and whether valuation discounts are available when transferring interests in entities for the benefit of fam - ily members. 1.7 Transparency and Increased Global Reporting Foreign Account Tax Compliance Act (FATCA) The Foreign Account Tax Compliance Act (FATCA) requires non-US financial institutions to report perti - nent information about financial assets and accounts owned by US taxpayers. Any US persons with foreign accounts must comply with these requirements under FATCA. Corporate Transparency Act (CTA) Under current FinCEN guidance, the Corporate Transparency Act (CTA) reporting regime has been narrowed. US entities and US persons are generally exempt from federal beneficial ownership information reporting, while certain foreign entities registered to do business in a US state or Tribal jurisdiction may still be required to report non-US beneficial ownership information unless an exemption applies. For high net worth clients using trusts, LLCs, pri - vate entities or cross-border structures, the prac - tical focus in 2026 may be confirming whether any foreign-formed entity requires reporting under CTA, maintaining accurate ownership and control records, and monitoring FinCEN rule-making and state-level transparency regimes. 2. Succession 2.1 Cultural Considerations in Succession Planning The US is culturally diverse, and succession planning reflects a wide range of family structures and values. While some families prioritise early wealth transfers and collaborative planning across generations, others prefer to retain control and delay transitions.
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