Frequently Asked Questions
As a foreign investor what is USA requirements to own a property in the USA?
There are certain basic requirements that must be met before purchasing US real estate. You must have a valid visa, supply proof that you can come and go freely, and verify that you are a citizen of your country. Having these in order before you start looking at property will help ensure there are no delays in the purchasing process.
How is real estate property taxed in the USA?
US Real Estate Tax is a major consideration for foreign investors. While the US market is currently viewed as offering the
best opportunity for profitable investments, how a sale is structured and taxed determines the true amount of profit to be had.
Should you rent your property, you'll be required to pay income tax. As a
foreign real estate investor, you
can simply
choose to have the gross income taxed, currently at a rate of 30%. Should you choose this basic flat rate, there are no
deductions allowed for maintenance, mortgage interest, utility payments, etc. There is, however, the possibility that
your country has treaties with the US that would make the flat rate less than 30%.
A better, and more popular alternative, is to treat investments in US real property as a trade or business. This allows
you to be taxed on net income rather than gross, which can greatly reduce your US Real Estate Tax bill.
Click here for more information about taxes.
Is any capital gains tax in the USA?
When you sell your real estate, capital gains tax is due. The US government has created FIRPTA (Foreign Investors Real
Property Tax Act) to ensure compliance with payment. It requires the buyer to take 10% from the sales price and send it
directly to the Internal Revenues Service as down payment for taxes due. Once a return is filed, the money is used
toward the taxes owed, or refunded if necessary.
There are some instances where
FIRPTA does not apply.
For instance, if you choose to exchange your property for
another similar property in the US, called a 1031 exchange, you would be exempt. Another common scenario which
allows a FIRPTA exemption is when the buyer is going to use the property as their personal residence and the
sales price is less than $300,000.
Can I get finance in the USA to purchase real estate?
Financing issues may arise when looking at Buying Real estate In USA. A majority of foreign buyers pay in cash. However,
if you're thinking of financing, be aware that there are more stringent requirements for foreign buyers. Banks usually
require a 20-40% down payment and interest rates can sometimes be 1% higher than the usual posted rates.
At the present it is almost impossible for foreigners to get finance in the USA. We recommend getting your finances
in your own country.