Ever considered investing in property in the United States, but felt overwhelmed by it all? Here are answers to our most commonly asked questions and some tips if you are a foreign national thinking about property investment in the US.
Do I need to become a citizen to buy a home in the U.S.?
No, you won’t need your citizenship or a green card, but you will need (in most situations) a Visa, and also an Individual Taxpayer Identification Number (ITIN). The ITIN is a tax-processing number assigned to foreign nationals who are required to have a U.S. taxpayer identification number, but who do not have one and are ineligible for Social Security numbers.
Is there a type of property I can’t purchase in the United States?
Foreign buyers are eligible to buy single-family homes, condominiums, townhomes, multi-family homes, and commercial real estate.
Housing cooperatives or co-ops often have rules prohibiting foreign ownership. That’s because co-ops generally require that a buyer’s source of income be from the United States and that most of the majority of the buyer’s assets be kept in the U.S. Co-op’s are rare in New England, but you sometimes see them in our coastal communities where land is held in trust. Generally though this is something you would be more likely to see in a larger city like New York.
What is FIRPTA?
FIRPTA refers to the Foreign Investment in Real Property Tax Act of 1980. This ruling authorizes the United States to withhold income tax when property is sold, exchanged, gifted, transferred or liquidated by a foreigner. The Internal Revenue Service takes 10-15% of the proceeds and the state government will also take a percentage.
What about Mortgages for overseas buyers in the US?
While cash purchases are a much easier, quicker process for foreign nationals, mortgages are also an option. Even if you are not a U.S. resident, you can take out a mortgage in the country. Mortgage lenders in the U.S. will give loans generally up to 70% of the sales price to an international client. Some basic requirements might apply, such as having an existing account with deposits of about $100,000 or more in a private bank with operations in the States. Be aware there may be mortgages specific taxes associated with the loan as well. Ask the lender to itemize all fees upfront prior to applying for a loan.
What other fees should I anticipate?
Unlike many other countries, property owners in the United States are subject to local annual property taxes. These taxes are assessed by the local municipality where your property is located, and foreign nations are not exempt from the obligation to pay,
What else do I need to know?
Every buyer’s situation is different. Investing here while attending school, or while here on a work contract is often the most financially wise decision a foreign national can make. We can help you break down your options and make the best decision for you, and help guide you through the process of investing in a foreign country. Reach out to us at firstname.lastname@example.org.