One Big Beautiful Bill Act (H.R. 1, 2025)

Three Clear Paths for International Investors in US Rental Real Estate

If you are an investor based outside the United States and looking to tap into one of the strongest rental markets in the world, now is the time. Thanks to the One Big Beautiful Bill Act, US real estate is more attractive, more tax-efficient, and more accessible to global capital than ever before. Here is a simplified guide for international investors.

1. Why 2025 to 2030 Is the Sweet Spot

Policy or Market Shift
Why It Matters
100% bonus depreciation (through 2029)
Investors can immediately write off the full value of buildings.
Permanent 20% pass-through deduction (Section 199A)
Lowers taxable income for individuals investing through pass-through structures.
US housing shortage of about 3.7 million units
High rental demand, low vacancy rates below 5%.
No added foreign tax restrictions
The US kept FIRPTA rules investor-friendly and preserved tax treaty benefits.
100% bonus depreciation (through 2029)
Policy or Market Shift

100% bonus depreciation (through 2029)

Why It Matters

Investors can immediately write off the full value of buildings.

Permanent 20% pass-through deduction (Section 199A)
Policy or Market Shift

Permanent 20% pass-through deduction (Section 199A)

Why It Matters

Lowers taxable income for individuals investing through pass-through structures.

US housing shortage of about 3.7 million units
Policy or Market Shift

US housing shortage of about 3.7 million units

Why It Matters

High rental demand, low vacancy rates below 5%.

No added foreign tax restrictions
Policy or Market Shift

No added foreign tax restrictions

Why It Matters

The US kept FIRPTA rules investor-friendly and preserved tax treaty benefits.

2. Three Investment Structures You Can Use

 
Option A: Buy Shares in a Public REIT
Option B: Invest in a Direct Joint Venture (pass-through LLC)
Option C: Form a New US Company (affiliate of your business abroad)
Typical net return
9% to 10% per year
Up to 40% IRR on select projects
Around 15% to 25% IRR after US corporate tax
Who pays US tax
The REIT; you receive dividends (with 15% to 30% withholding)
You do, but bonus depreciation and 20% deduction can reduce or eliminate it
The US company pays 21% corporate tax, then withholds on dividends to the parent
Bonus depreciation
Stays inside the REIT
Passed directly to you as an investor
Applied at the US company level to reduce corporate tax
20% Section 199A deduction
Only if you file a US tax return
Yes, automatically applied
Not available to corporations
FIRPTA at exit
None if you own less than 10%
15% withheld at sale, then reconciled
15% withheld unless exemption applies
Paperwork
Broker handles reporting
W-8BEN or W-8BEN-E → 8805, K-1, 1040-NR or 1120-F
File Form 1120 + 5472, withhold on dividends using Form 1042
Control over the investment
None
Full voting rights on budget, leverage, and sale
Full control through your own US entity
Ongoing fees
1% management fee every year
One-time 4% development fee and a promote after 8% to 12% preferred return
Whatever you choose for your affiliate’s overhead
Typical net return
Option A: Buy Shares in a Public REIT

9% to 10% per year

Option B: Invest in a Direct Joint Venture (pass-through LLC)

Up to 40% IRR on select projects

Option C: Form a New US Company (affiliate of your business abroad)

Around 15% to 25% IRR after US corporate tax

Who pays US tax
Option A: Buy Shares in a Public REIT

The REIT; you receive dividends (with 15% to 30% withholding)

Option B: Invest in a Direct Joint Venture (pass-through LLC)

You do, but bonus depreciation and 20% deduction can reduce or eliminate it

Option C: Form a New US Company (affiliate of your business abroad)

The US company pays 21% corporate tax, then withholds on dividends to the parent

Bonus depreciation
Option A: Buy Shares in a Public REIT

Stays inside the REIT

Option B: Invest in a Direct Joint Venture (pass-through LLC)

Passed directly to you as an investor

Option C: Form a New US Company (affiliate of your business abroad)

Applied at the US company level to reduce corporate tax

20% Section 199A deduction
Option A: Buy Shares in a Public REIT

Only if you file a US tax return

Option B: Invest in a Direct Joint Venture (pass-through LLC)

Yes, automatically applied

Option C: Form a New US Company (affiliate of your business abroad)

Not available to corporations

FIRPTA at exit
Option A: Buy Shares in a Public REIT

None if you own less than 10%

Option B: Invest in a Direct Joint Venture (pass-through LLC)

15% withheld at sale, then reconciled

Option C: Form a New US Company (affiliate of your business abroad)

15% withheld unless exemption applies

Paperwork
Option A: Buy Shares in a Public REIT

Broker handles reporting

Option B: Invest in a Direct Joint Venture (pass-through LLC)

W-8BEN or W-8BEN-E → 8805, K-1, 1040-NR or 1120-F

Option C: Form a New US Company (affiliate of your business abroad)

File Form 1120 + 5472, withhold on dividends using Form 1042

Control over the investment
Option A: Buy Shares in a Public REIT

None

Option B: Invest in a Direct Joint Venture (pass-through LLC)

Full voting rights on budget, leverage, and sale

Option C: Form a New US Company (affiliate of your business abroad)

Full control through your own US entity

Ongoing fees
Option A: Buy Shares in a Public REIT

1% management fee every year

Option B: Invest in a Direct Joint Venture (pass-through LLC)

One-time 4% development fee and a promote after 8% to 12% preferred return

Option C: Form a New US Company (affiliate of your business abroad)

Whatever you choose for your affiliate’s overhead

Quick takeaway:
  • If you want high control and maximum tax benefits, Option B is your best route.
  • If you want low involvement and public market liquidity, go with Option A.
  • If your business prefers to operate fully through a US entity you own, Option C offers full autonomy.

3. Real-World Example (Same Project, Different Structures)

Option B: Direct JV
Option C: US Affiliate Corporation
Net rent (before tax)
$100,000
$100,000
Bonus depreciation (Year 1)
-$100,000
-$100,000
Taxable income (Year 1)
$0 → no US tax
$0 → no corporate tax
Year 4 income (after bonus used up)
$100,000
$100,000
20% Section 199A deduction
-$20,000
Not applicable
Final tax base
$80,000
$100,000
Tax rate
37% (individual)
21% (corporation)
US tax owed
$29,600
$21,000
Withholding when cash is repatriated
0% to 30% depending on treaty
0% to 30% on dividends to the international parent
Net rent (before tax)
Option B: Direct JV

$100,000

Option C: US Affiliate Corporation

$100,000

Bonus depreciation (Year 1)
Option B: Direct JV

-$100,000

Option C: US Affiliate Corporation

-$100,000

Taxable income (Year 1)
Option B: Direct JV

$0 → no US tax

Option C: US Affiliate Corporation

$0 → no corporate tax

Year 4 income (after bonus used up)
Option B: Direct JV

$100,000

Option C: US Affiliate Corporation

$100,000

20% Section 199A deduction
Option B: Direct JV

-$20,000

Option C: US Affiliate Corporation

Not applicable

Final tax base
Option B: Direct JV

$80,000

Option C: US Affiliate Corporation

$100,000

Tax rate
Option B: Direct JV

37% (individual)

Option C: US Affiliate Corporation

21% (corporation)

US tax owed
Option B: Direct JV

$29,600

Option C: US Affiliate Corporation

$21,000

Withholding when cash is repatriated
Option B: Direct JV

0% to 30% depending on treaty

Option C: US Affiliate Corporation

0% to 30% on dividends to the international parent

4. Forms You’ll Need

We work alongside trusted third-party consultants with decades of experience to guide you through every legal, tax, and compliance step.

Structure
Key IRS Forms
Direct JV as foreign partner
W-8BEN or W-8BEN-E, Form 8813, Form 8805, Schedule K-1, 1040-NR (individual) or 1120-F (foreign corporation)
US affiliate company (you own it)
Form 1120 (corporate tax return), Form 5472 (foreign-owned US company), Form 1042 and 1042-S for dividends sent home
Public REIT shares
W-8BEN, broker handles Form 1042-S
Direct JV as foreign partner

W-8BEN or W-8BEN-E, Form 8813, Form 8805, Schedule K-1, 1040-NR (individual) or 1120-F (foreign corporation)

US affiliate company (you own it)

Form 1120 (corporate tax return), Form 5472 (foreign-owned US company), Form 1042 and 1042-S for dividends sent home

Public REIT shares

W-8BEN, broker handles Form 1042-S

5. Final Notes for International Investors

  • Bonus depreciation is your biggest tax shield. Use it to delay or cancel out early-year tax bills.
  • Section 199A works only through pass-through LLCs, not C corporations.
  • Tax treaties between the US and your country may lower dividend and interest withholding, check with your CPA.
  • Corporations add flexibility but may reduce after-tax returns due to corporate tax plus dividend tax.
  • Work with experienced CPAs and attorneys who understand cross-border real estate deals and IRS forms.

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