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We believe that our investment philosophy will be of particular interest to international investors looking to place their funds in discounted U.S. real estate projects that generate positive cash flow. Our objective with international investors is to provide a simple and secure process where we coordinate all U.S. aspects of their investment as follows:
a) International investors would initially place their funds in U.S. or foreign accounts that would permit those funds to be easily transferred into the United States. After a decision is made to invest in a project, the requisite funds would be transferred to a trust account at the law firm of Levinson, Gritter & DiGiore, LLP until the closing of the purchase.
b) All decisions on whether to invest in any given project, and the amount to be invested, would be made solely by the international investor. Such decisions would be made only after receipt of an Offering Memorandum and the execution of a Subscription Agreement for a project.
c) International investors may want to appoint a U.S.-based representative to review the documentation for each project and assist them in making an investment decision. Any investor or their representative is, of course, welcome to inspect any property before making an investment decision. In addition, our team is available to answer all questions about the property and the investment.
d) International investors have an obligation to pay U.S. taxes based on the amount and category of taxable income generated from a project. The entity owning the property would be required to withhold between 10% and 30% of the annual taxable income from the project depending on the classification of income, and to pay such amount to the Internal Revenue Service. An individual international investor would file a non-resident U.S. tax return and would receive a refund if the actual tax owed is less than the amount withheld. Practically speaking, most individual investors from a jurisdiction without a U.S. tax treaty would pay a blended U.S. tax rate in the range of between 15% and 30% of the taxable income generated over the life of a project.
e) As an example, assume a project that is projected to generate an annual pre-tax Internal Rate of Return of 25%. This would produce an approximately 21.25% after-tax return at the 15% tax rate and a 17.5% after-tax return at the 30% tax rate.
f) Based on the needs of an individual investor, we would recommend for a U.S. tax accountant to obtain a U.S. taxpayer identification number, prepare the non-resident U.S. tax return and coordinate any refund on the amount withheld. We will work closely with such U.S. tax accountant to insure he has all information necessary to prepare the tax return and obtain any refund. In addition, we will work closely with international investors and their professional advisors to develop an ownership structure for the investment in the most advantageous manner for each investors.
The above projected tax rates are approximations based on current U.S. tax rules and depend on many factors such as the international investor’s tax jurisdiction, the amount invested, his or her other U.S. source income, the classification of income generated by the project and many other factors. These rules would be different for corporate and other classes of investors. The above information is not meant to be tax advice and all foreign investors are requested to obtain independent tax advice regarding their investment.
This is not an offer to sell securities. Any such offer must be made upon review of an Offering Memorandum
for a particular transaction and the execution of a Subscription Agreement.