US investors are generally required to directly report their allocable shares of the LLC’s items of income, gain, profit, loss, and deduction directly on their U.S. federal and state income tax returns each year—regardless of whether or not the LLC makes any cash distributions during such year.
The requirements to file state income tax returns may apply, depending on the investor’s state of residence and/or the state where the LLC’s properties are located.
Investments from IRAs, pension plans, charitable trusts or organizations, private foundations, or other similar tax-exempt entities are typically exempt from U.S. federal income taxation on most types of income or gains derived from investments. Investments by such entities in real estate projects—particularly if the projects involve debt financing—can sometimes give rise to taxable income or other adverse tax issues, depending on the type of investment or investor involved. Tax-exempt entities should check with their tax advisors before investing.
Non-US investors are subject to withholding taxes, generally required to be collected by HoneyBricks from your allocable shares of rental income and gains from the sale of the properties. The percentage withheld is influenced by any tax treaty that your country may have with the US.
An investment in US real estate projects by non-US investors usually give rise to requirements for the investor to file US and state income tax returns (to the extent that such non-US investors are not already required to file such tax statements).