The US real estate market is a global marketplace, with over $80 billion of estimated international investment in 2016 alone. While the market is fully developed, and has simple rules and regulations, there are some basic practices a foreign buyer should know and understand ahead of time:
Types of property available for international buyers:
Generally, there are no restrictions on real estate ownership for foreigners in the US. Significant portion of Florida and New York luxury real estate belongs to foreign investors. Individual and institutional international investors are eligible to buy single-family homes, condominiums, duplexes, triplexes, quadruplexes, townhomes, and commercial properties.
Some types of real estate like Co-ops or special types of housing 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 US, which makes it difficult or impossible to buy for those who don’t file US taxes.
Generally, foreign investors will be required to make a 30-50% downpayment to be approved for a mortgage. IceBridge Estates will coordinate all procedures related to mortgage application and approval.
Real Estate Taxes:
Property owners in the US must pay annual property taxes based on the assessed value of the property. This amount varies by county and state.
Foreign investors can purchase property directly in their own names, or through a business entity, such as a domestic corporation, foreign corporation, limited partnership, joint venture, real estate investment trust or limited liability company.
For the most optimal structure, property uses and potential tax consequences related to your unique circumstances must be considered. Your real estate attorney and accountant should be able to provide counsel concerning your options.
In person vs. virtual closing:
There’s no requirement to attend a real estate closing in person. In the event that you cannot or choose not to attend your closing, you must execute a “Power of Attorney.” This is a written document will authorize another person to represent you and sign on your behalf.
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. Proper structuring may help to defer these taxes. Your real estate attorney and accountant should be able to provide counsel concerning your options.
We can help you find a qualified accountant and attorney to advise you on the above matters.