Hi all, Just a query for those Australians who have invested in US property or US shares - how have you structured your assets to avoid the prohibitive US estate taxes which can be up to 40% of the total capital value of your holdings? My understanding is LLC's don't provide much benefit, as they are effectively sole proprieterships from a IRS perspective - you would either need to set up a Aus corporation or an Australian discretionary trust as your main vehicle, but this seems unnecessarily complex... Interested in hearing opinions of people who have "been there, done that" Cheers
I now have 5 LLCs (Limited Liability Company) and my Australian Trust is the member of my LLC. I got the structure sorted using a US tax accountant. This scenario works for me US tax laws are complex, I would suggest you contact a US tax accountant so you can get your head around this. I am not an expert and would do nothing in US unless I got the right advice to start with. This may be worth reading, doubt you need to worry about this tax 4 Things You Probably Don't Understand About Estate Taxes MTR
Yes there is, but for non US citzens it is quite low: https://www2.deloitte.com/content/d...rules-for-resident-and-nonresident-aliens.pdf I agree about seeing an expert, but I'd say most non-US citizens need to worry about this as the threshold for us is much lower than the 5M for US citizens.
Foreign Investors Learn Why a Foreign Corporation is U.S. Death Tax Trap | International Tax Counselors Blog Here we go. My umbrella LLC is in Wyoming and member is Australian Trust, property LLC set up in Atlanta buy owned by LLC in Wyoming, so perhaps not an issue for me?? However, I will phone my US tax accountant now that this has been raised and will report back MTR
Good link - will read the follow up references. It all seems so complex and expensive though. I'm a fan of simplicity. Do you find all the structuring a hassle?
Just sent an email to my US tax accountant on this, lets see what he comes back with. Not now, its getting your head around US terminology, ie member is the owner etc etc. The headache is gone if you have a great accountant that understand US tax law and how Australian tax/trust works and you have Aussie/US accountant working together, very simple, one phone call per year. I recommend you use expert on US tax laws in US as they can deal direct with IRS if necessary and they understand the beast. I don't recommend you use an Australian accountant for US tax just my opinion from my experience.
I have little knowledge on this but it seems that as long as US assets are owned by a Trust / company there is little to fear from US Estate taxes. But DYOR as I may be wrong.
@MTR Thanks for sharing your US experience in most of these threads. I'm so keen to start owning something state side but I know so little (will get there in time!). As far as advisors go, would you say the most important to have is a US tax accountant and property manager? Do you use Buyer agents at all to help screen property candidates? Lastly, what are some indicative fees you pay for their services? I'm rather new here so big apologies if these questions have been asked and answered somewhere else
This is my understanding on US estate taxes, I had enquired on this several years ago and this is the reply I recieved from my CPA (not advise so please do your own due diligence). Essentially if properties are owned through a trust estate taxes would not apply. Australia is one of the few countries that has an estate tax treaty with the US. The short version of the story is that if an Australian resident passes and holds US assets, he/she may owe US estate tax. This will only take effect if that person’s total worldwide assets exceed $5,000,000+. Since a trust is not an individual, trust ownership does not create this problem directly.
An "Australian trust" which is a LLC member probably isnt an Australian trust anymore. Australian tax law and US tax law may determine that the trust is a US entity....and US tax law doesnt like our trusts. US estate taxes are a unlikely concern but the nature of the trust in the US isnt as obvious for Australian trusts
