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    Taxation of Individuals – Form 1040NR

    Taxation of Individuals – Form 1040NR

    Unlike Israel, where tax for passive income is imposed at predetermined rates for each type of income,

    In the US such income will be taxed according to progressive tax rates.

    Moreover, the US exempts net profits of up to $4,050, according to the number of individuals included in the report (in case of an Israeli investor, 1).

    Tax brackets begin at a 10% rate and reach up to 39.6% of the net profits.

    When selling a property, capital gains tax rates are imposed depending on the period of ownership.

    Ownership exceeding one year amounts to augmented tax rates of up to 20%,

    but the deducted depreciation will be taxed at a maximum of 25%.

    This deal is reported to the IRS, and the individual foreigner withheld taxes of 15% (in special cases 10%).

    The withholding agent is the title company or the transfer in most cases.

    The investor can and will be asked to submit an annual tax return in the following year in order to apply for a tax rebate.

    Generally, you are considered a resident alien if you meet either the green card test or the substantial presence test for 2016.

    Even if you do not meet either of these tests, you may be able to choose to be treated as a U.S. Resident for part of 2016.

    Generally, you are considered a nonresident alien for the year if you are not a U.S. Resident under either of these tests.

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