Foreign Nationals are permitted to own real estate in the United States. In fact, there are very few difference between a foreign and U.S. buyer when purchasing real estate. It is important that foreign buyers understand certain information about U.S. real estate practices that vary greatly from country to country.
Transparency: In the U.S. every real estate purchase must be transparent. This means, that unlike many countries, where buyers can fly under the radar, in the United States properties are placed on the MLX and readily open to the public. Once the sale takes place, the deed is recorded in the Public Records of the County where the property lies. This document is the title and reveals the buyers name and address. Commissions are also revealed on the HUD Settlement Statement and if financing, the lender will collect certain documents that will also require the buyer to reveal bank statements, bank records, tax returns and other confidential data.
Financing: Over the last couple of years, banks have loosened their restrictions significantly on Foreign Nationals. More qualified buyers can obtain financing when generally giving a 30% down payment. Most banks require the following for the foreign national programs:
$100,000 on deposits in a bank
30% down payment (40% in Miami)
$3,000.000 loan limit (property value no more than $4.3 million)
12 months reserves for mortgage, maintenance and taxes required
30 year and 15 year fixed rate mortgages available
4. No need to travel to the U.S. to close the deal. At the closing, if it is a cash deal, there is no need for the foreigner to sign in person. If lender financed, often a power of attorney can be provided to avoid the necessity of coming into the country to sign. Monies are exchanged via wire transfer and you are done.
5. Foreign Buyer Can Defer Capital Gains Taxes by Buying Another Investment Property: While Foreign Nationals may be subject to the FIRTPA tax (10% withholding at the time of sale), the U.S. government allows foreign sellers to use Section 1031 of the IRS Code to defer gains when they purchase another property within a certain amount of time from the sale.
6. Foreign Buyers can avoid U.S. Estate Tax: With some fancy planning, at the death of a foreign buyer, his estate though typically taxed at 46%, it can be avoided. A Limited Liability Company can be set up with a Foreign Corporations. The LLC would own the property, and the Foreign Corp would own the LLC. This is tricky and if not done right, can trigger a taxable event. So it is important to consult with an attorney/accountant prior to set up
Many other benefits apply to foreign buyers of U.S. real estate.
At the Law Offices of Jacqueline A. Salcines, attorney Jacqueline Salcines, Esq. is both a real estate attorney and accountant, able to give legal and tax advice.
No office visit is required and the phone consultation is 100% free of charge. Call and speak to attorney Jacqueline A. Salcines, Esq. Today!
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