Why Foreign Investors Use a US Company to Buy Real Estate

You found the perfect vacation rental in Orlando. The numbers work. The location is right. But before you wire the down payment, there’s a question that will shape your tax bill, your liability exposure, and what happens to that property if something happens to you: should you buy it in your own name, or through a US company?

For most non-resident aliens (NRAs) buying investment property in the United States, the answer is a company — specifically, an LLC. But the reasons go deeper than most guides explain. This isn’t just about “asset protection” in some abstract sense. It’s about a $60,000 estate tax exemption that could cost your family hundreds of thousands of dollars. It’s about FIRPTA withholding mechanics. It’s about keeping Florida probate courts out of your family’s life.

This guide walks you through the entire process: why a US entity matters for NRAs, how to form one in Florida, the tax and estate planning implications, and the step-by-step mechanics of getting from zero to property owner. Whether you’re a Brazilian investor eyeing Kissimmee or a European buyer looking at Miami Beach, the framework is the same.

The $60,000 Problem: Estate Tax for Non-Resident Aliens

Here’s the number that changes everything: $60,000.

That’s the federal estate tax exemption for non-resident aliens who own US-situs assets. Compare that to the $13.99 million exemption that US citizens and residents get in 2025. The gap is staggering.

What does this mean in practice? If you’re a Brazilian citizen living in São Paulo and you own a $400,000 vacation rental in Florida in your personal name, here’s what happens when you die:

• Your estate gets a $60,000 exemption
• The remaining $340,000 is subject to US federal estate tax
• Estate tax rates for NRAs start at 18% and climb to 40% on amounts over $1 million
• On $340,000, the tax bill would be roughly $70,000 to $100,000

Your family just lost a quarter of the property’s value to the IRS — on top of whatever estate taxes apply in your home country. And that’s on a modest property. On a $1 million home, the math gets brutal fast.

How a Foreign Corporation Changes the Equation

US estate tax applies to US-situs assets owned by NRAs. Real estate sitting in Florida is obviously US-situs. But shares of a foreign corporation are generally not US-situs assets, even if that corporation owns US real estate.

This creates a planning opportunity. If you hold US property through a foreign corporation (or a structure involving a foreign corporation that owns a US LLC), the estate tax exposure can potentially be reduced or eliminated. The property is still there, generating income, appreciating in value — but from the IRS estate tax perspective, what you “own” are shares of a foreign company, not US real property directly.

Important caveat: This structure has trade-offs. A foreign corporation owning US real estate may face branch profits tax, won’t get the same capital gains rates, and adds complexity. The right structure depends on your specific situation, the property value, and your home country’s tax treaty with the US. This is exactly where professional tax planning earns its fee.

Direct Ownership vs. LLC vs. Corporation: What Actually Makes Sense

Let’s compare the three most common ownership structures for NRAs buying US real estate.

Option 1: Direct Personal Ownership

When it works: You’re buying a primary residence under $300,000 (lower FIRPTA withholding), you want the simplest possible setup, and estate tax exposure is acceptable.

• No formation costs or annual LLC fees
• Easier mortgage qualification (some lenders won’t lend to LLCs)
• Homestead exemption available in Florida for primary residents
• Full estate tax exposure (only $60,000 exemption)
• No liability protection — personal assets at risk from lawsuits
• Property goes through Florida probate (slow, public, expensive)

Option 2: US Single-Member LLC (Most Common for NRA Investors)

When it works: You’re buying investment property, want liability protection, and need a clean operating structure for rental income.

• Liability shield — personal assets protected from property-related lawsuits
• Privacy — your name doesn’t appear on public property records
• Avoids Florida probate (transfer LLC membership interest instead)
• Pass-through taxation — rental income reported on your personal return (Form 1040-NR)
• Annual cost: ~$138.75 (Florida annual report) plus registered agent ($50-200/year)
• Does NOT eliminate estate tax — a single-member LLC owned by an NRA is “disregarded” for tax purposes; the IRS looks through it
• Does NOT avoid FIRPTA — an LLC with any foreign member is treated as a foreign person

Option 3: Foreign Corporation Owning a US LLC

When it works: High-value properties where estate tax planning is the priority, and you’re willing to accept additional complexity and compliance costs.

• Potential estate tax elimination (shares of foreign corp are not US-situs)
• Additional layer of liability protection
• More complex: two entities to maintain, potential branch profits tax
• Corporate tax rates apply (21% federal) instead of individual rates
• No capital gains rate benefit on sale
• Higher formation and annual compliance costs ($3,000-5,000+/year)

The bottom line: For most NRA investors buying one or two Florida rental properties in the $200,000-$600,000 range, a Florida single-member LLC hits the right balance of protection, simplicity, and cost. If your portfolio exceeds $1 million in US real estate, the foreign corporation structure deserves serious analysis — the estate tax savings can far outweigh the added complexity.

How to Form a Florida LLC: Step by Step

Florida makes LLC formation straightforward, even for foreign nationals. Here’s the process from start to finish.

Choose Your LLC Name

Search the Florida Division of Corporations (Sunbiz.org) to confirm your desired name is available. The name must include “LLC” or “Limited Liability Company.” Avoid names too similar to existing entities — the state will reject them.

Tip: Keep it generic. “Sunshine Properties LLC” tells the world nothing about who you are or where you’re from. That’s the point.

Designate a Florida Registered Agent

Florida requires every LLC to have a registered agent with a physical address in the state. This person or company receives legal and government correspondence on your behalf.

As a foreign investor, you’ll almost always need a registered agent service. Cost: $50-200 per year. Companies like Northwest Registered Agent, Incfile, or local Florida attorneys offer this service.

File Articles of Organization

File online through Sunbiz e-filing. The filing fee is $125. You’ll need:

• LLC name
• Registered agent name and address
• Principal address (can be your home country address)
• Manager/member names
• Effective date

Processing typically takes 2-3 business days for online filings.

Get an EIN (Employer Identification Number)

The EIN is your LLC’s tax ID number — you need it for bank accounts, tax returns, and property purchases.

If you have an SSN or ITIN: Apply online at IRS.gov and get your EIN immediately.

If you don’t have an SSN or ITIN: You must apply by mail or fax using Form SS-4. Send it to the IRS and expect 4-6 weeks for processing. Fax applications to the IRS International line sometimes get processed faster (within 2 weeks), but don’t count on it.

This is often the biggest bottleneck for foreign investors. Plan ahead — don’t wait until you’ve found a property to start the EIN application.

Draft an Operating Agreement

Florida doesn’t require you to file an operating agreement, but you absolutely need one. This document defines:

• Ownership structure (who owns what percentage)
• Management responsibilities
• Profit distribution rules
• What happens if a member dies or wants to sell
• Transfer restrictions

For a single-member LLC, the operating agreement is simpler but still important. Banks will ask for it when you open an account. Title companies will want it at closing. Get it done right — budget $500-1,500 for an attorney-drafted agreement.

Open a US Bank Account

This is where many foreign investors get stuck. US banks have varying policies for foreign-owned LLCs. You’ll typically need:

• Articles of Organization
• EIN confirmation letter (CP 575)
• Operating Agreement
• Passport and secondary ID for all members
• Proof of address (utility bill from home country, notarized)

Banks that work with foreign nationals: Chase, Bank of America, Wells Fargo, and HSBC all have programs, but policies vary by branch. Some require an in-person visit; others accept applications by mail with notarized documents. Call ahead.

Community banks and credit unions near your target property area can be more flexible than national banks. A local bank in Kissimmee that works with Brazilian investors regularly will know exactly what documents they need.

Purchase the Property in the LLC’s Name

Once your LLC has a bank account with sufficient funds (or mortgage pre-approval), you’re ready to buy. The title will be held in the LLC’s name. Your real estate attorney or title company handles the closing, and the deed records the LLC as the owner.

The ITIN Question: Do You Need One?

An ITIN (Individual Taxpayer Identification Number) is the IRS-issued tax ID for individuals who don’t qualify for a Social Security Number. As a foreign investor, here’s when you need one:

• Filing a US tax return — if your LLC earns rental income, you’ll file Form 1040-NR. That requires an ITIN.
• Applying for a withholding certificate — to reduce FIRPTA withholding below 15% when selling, you’ll need an ITIN.
• Some mortgage applications — certain lenders require the individual member to have an ITIN.

How to get one: File Form W-7 with the IRS. You can submit it alongside your first tax return, or through a Certified Acceptance Agent (CAA) who can verify your identity documents without you mailing your original passport to the IRS. Processing takes 6-10 weeks.

Pro tip: Apply for your ITIN early. Don’t wait until tax season. A qualified tax preparer experienced with NRA filings can submit the W-7 with your first 1040-NR and get both processed together.

Tax Obligations Once You Own the Property

Owning US real estate through an LLC triggers several ongoing tax requirements. None are optional.

Federal Income Tax (Form 1040-NR)

Rental income from US real property is taxable. As an NRA, you have two options:

• 30% flat withholding on gross rental income (the default if you do nothing)
• Net income election — file Form 1040-NR and pay tax on net rental income (after deducting expenses like mortgage interest, property taxes, insurance, depreciation, management fees, repairs). This almost always results in a lower tax bill.

To make the net income election, file a timely return. This is not optional if you want to keep more of your rental income. The first return must be filed within 16 months of the original due date.

Florida State Tax

Florida has no personal income tax. However, if your LLC is classified as a corporation (multi-member LLCs can elect this), it may owe Florida corporate income tax (5.5% on income over $50,000). For most single-member LLCs, this doesn’t apply.

Sales Tax and Tourist Development Tax

If you’re renting the property short-term (less than 6 months), you must collect and remit:

• Florida state sales tax: 6% (plus county surtax in some areas)
• Tourist Development Tax (TDT): Varies by county — Osceola County charges 6%, Orange County charges 6%, Polk County charges 5%

You’ll need a Florida sales tax registration and must file returns monthly, quarterly, or semi-annually depending on your volume. Property managers like Vacasa or local management companies often handle this collection, but the legal responsibility is yours.

BOI Report (Beneficial Ownership Information)

Under the Corporate Transparency Act, most LLCs must file a BOI report with FinCEN disclosing their beneficial owners. This is separate from tax filings. New LLCs formed after January 1, 2024 must file within 90 days of formation. The report is free but mandatory — penalties for non-filing can reach $500 per day.

Florida Annual Report

Every Florida LLC must file an annual report with the Division of Corporations by May 1 each year. The fee is $138.75. Miss the deadline and you’ll face a $400 late fee. Miss it entirely and the state can dissolve your LLC.

FIRPTA: What Happens When You Sell

We’ve covered FIRPTA in depth in our FIRPTA Withholding Strategies guide, but here’s the summary as it relates to LLC ownership:

• When a foreign person sells US real property, the buyer must withhold 15% of the gross sales price and remit it to the IRS
• An LLC with any foreign member is treated as a foreign person — the LLC does not shield you from FIRPTA
• The withholding is a prepayment of tax, not the actual tax. File your return and claim a refund if the withholding exceeds your actual tax liability
• You can apply for a withholding certificate (Form 8288-B) before closing to reduce the withholding to your actual expected tax liability

Timeline reminder: Withholding certificate applications take 90+ days for IRS processing. If you’re planning to sell, start the application months before listing.

Common Mistakes Foreign Investors Make

• Buying in personal name without considering estate tax. The $60,000 exemption catches many investors off guard. By the time they realize the exposure, restructuring is expensive and may trigger transfer taxes.
• Assuming an LLC avoids FIRPTA. It doesn’t. A foreign-owned LLC is treated as a foreign person for FIRPTA purposes.
• Not filing a US tax return. Even if you had a net loss after expenses, you need to file to claim the net income election. No return = 30% withholding on gross rents.
• Waiting until closing to apply for an EIN. Foreign nationals without an SSN/ITIN face 4-6 weeks of processing. Start this the day you form the LLC.
• Skipping the operating agreement. Banks and title companies will ask for it. Without one, you’ll delay your purchase and create legal ambiguity.
• Ignoring BOI filing requirements. The Corporate Transparency Act penalties are steep and enforcement is active. Don’t skip this.
• Choosing Delaware or Wyoming for the LLC. If the property is in Florida, form the LLC in Florida. A Delaware LLC owning Florida property still needs to register in Florida (foreign qualification), costing you fees in two states with zero tax benefit.

What to Remember

• NRAs face a $60,000 estate tax exemption on US assets vs. $13.99 million for citizens — proper entity structure can reduce or eliminate this exposure
• A Florida single-member LLC is the most common and practical structure for NRA investors buying one or two rental properties
• LLC formation in Florida costs about $125 plus $138.75/year in annual reports — straightforward, even for foreign nationals
• Get your EIN early (4-6 weeks by mail if no SSN/ITIN) — this is the biggest bottleneck
• LLCs do NOT avoid FIRPTA or estate tax by themselves — additional planning may be needed for high-value properties
• Ongoing compliance includes federal tax returns, Florida sales tax, TDT collection, BOI reports, and annual reports

How Celeraxiom Can Help

Setting up the right structure before you buy is where the real savings happen — not after. At Celeraxiom, we help foreign investors with entity formation, EIN and ITIN applications, ongoing tax compliance for rental properties, and the kind of estate and tax planning that prevents expensive surprises down the road. If you’re buying property in Florida and want to get the structure right from day one, let’s talk.

Frequently Asked Questions

Can a foreigner open an LLC in the US to buy real estate?

Yes. There are no citizenship or residency requirements to form an LLC in Florida or any other US state. Foreign nationals can form an LLC, get an EIN, open a bank account, and purchase property — all without a visa or Social Security Number. The process takes 2-8 weeks depending on how quickly you get your EIN.

Does an LLC protect foreign investors from US estate tax?

A single-member LLC owned directly by an NRA does not provide estate tax protection. The IRS treats it as a “disregarded entity” and looks through it to the individual owner. For estate tax planning, more advanced structures involving foreign corporations or trusts may be appropriate — but they come with added complexity and cost that must be weighed against the potential tax savings.

How much does it cost to form a Florida LLC for real estate investment?

First-year costs typically run $1,000-2,500, including the $125 state filing fee, $50-200 for a registered agent, $500-1,500 for a professionally drafted operating agreement, and initial tax return preparation. Annual costs after that are roughly $500-1,000 (annual report, registered agent, tax prep). These costs are deductible as business expenses against your rental income.

Should I form my LLC in Delaware or Florida?

If the property is in Florida, form the LLC in Florida. A Delaware LLC that owns Florida property must still register as a “foreign LLC” in Florida, file reports in both states, and pay fees to both. There’s no tax advantage — Delaware’s benefits (like the Chancery Court) apply mainly to large corporations and complex business disputes, not single-property real estate investments.

What is the FIRPTA withholding rate for LLC-owned properties?

15% of the gross sales price. An LLC with any foreign member is treated as a foreign person, so the LLC structure does not reduce or eliminate FIRPTA withholding. However, you can apply for a withholding certificate (Form 8288-B) before closing to reduce the withholding to your actual expected tax liability. If the buyer intends to use the property as a residence and the price is $300,000 or less, the withholding rate drops to 0%.