IMPORTANT information for international buyers.
Read this, and contact me for more information!
QUESTIONS & ANSWERS
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 an Individual Taxpayer Identification Number (ITIN). That's a tax-processing number assigned to foreign nationals who are required to have a U.S. taxpayer identification number, but do not have one and are ineligible for Social Security numbers.
An ITIN can be issued by the Internal Revenue Service or by a Certified Professional Accountant approved by the IRS.
You may also need a valid foreign passport, visa and two or more current photo identifications.
What should I expect from my first meeting with my real estate agent?
This is the perfect time for you to tell your agent exactly what you're looking for in a property and your budget. It might also be a good idea to take the time to tell your agent how the home-buying process works in your native country and ask about any differences in the U.S. market.
The more you know, the less stressed you’ll be when you enter into the negotiation process.
Will I need to hire a real estate lawyer?
Although not mandated, you may want to seek the services of a real estate attorney to help with any legal issues or questions you may encounter along the way. A real estate lawyer can review the sales contract for you, check the title and other documents relating to your purchase, and advise on legal and tax issues concerning your property.
Is there a type of property I can't purchase in the United States?
Foreign buyers are eligible to buy single-family homes, condominiums, duplexes, triplexes, quadraplexes and town-homes.
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.
Should I purchase U.S. property in my name?
Foreign investors can purchase property directly - in their own names - or through some sort of business entity, such as a domestic corporation, foreign corporation, limited partnership, joint venture, real estate investment trust or limited liability company (LLC).
How the property will be used should play into your decision. Additionally, the structure through which you purchase your property can have dramatic tax consequences. Your real estate attorney and accountant should be able to provide counsel concerning your options.
Can I pay for my property in cash?
Yes, all-cash purchases are permitted, but U.S. law mandates that cash transactions over $10,000 be reported to the federal government.
The requirement for reporting involves everyone connected to the transaction (purchaser, real estate agents, attorneys and title companies). The government wants to know how you earned the money and that it was legally obtained.
Cash buyers can potentially save money on mortgage application fees, loan origination fees, appraisals and title insurance.
Do I have to travel to the U.S. for the closing?
While you may very well want to attend your real estate closing, it is not necessary. 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 authorizing another person to represent you and sign on your behalf.
Are there additional fees I will need to pay at closing?
Yes, the buyer typically is responsible for paying for the title search and insurance, legal fees and recording fees, amounting to an additional 1 percent to 2.25 percent of the total cost of the transaction. For example, on a $300,000 home, that amounts to another $3,000 to $6,750.
How will a U.S. real estate purchase affect my taxes?
A foreign property owners' tax liability in his home country will vary depending upon where the purchaser is from and whether that country has a tax treaty with the United States. Consult a tax attorney familiar with your home country's treaty to get answers to tax-related questions.
The United States government requires that foreign nationals pay U.S. income taxes (state and federal) on any net income (rental revenues less expenses) received from rental property.
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 percent of the proceeds and the state government will also take a percentage.