Since there is no citizenship requirement for real property sales, non-US citizens are free to buy property in the United States.
However, non-US citizens should always count on the guidance of an expert US legal counselor to properly handle all the required proceedings and anticipate the tax liabilities involved in the process.
In this article, you find out the essentials you need to know to buy US property as a non-US citizen.
Can a Non-US Citizen Buy Property in USA? – Types of Real Property
When looking for properties to buy on US soil, foreigners are eligible to buy virtually any type of real estate – single-family homes, condos, oceanfront properties, suburban residential homes, townhomes, duplexes, triplexes, quadplexes, or even vacant land.
However, it is common to find rules in place to prohibit foreign ownership of housing cooperatives and co-ops. Generally, the acquisition of co-ops requires the buyer to prove his/her source of income is from the United States and that most of the buyer’s assets are held within US jurisdiction.
Can a Non-US Citizen Buy Property in USA? – Transferring Ownership Title of Property
Many non-US citizens often ask themselves whether they should purchase US property in their own name(s). In this regard, foreign buyers have two main options – buying a property directly by transferring title to their own name(s) or buying through a business entity.
It is possible to title the property to a domestic or foreign corporation, as well as limited partnerships, limited liability companies (LLCs), or even a US trust. When trying to identify the right option, non-US citizens should assess:
- How will the property be used upon acquisition?
- What are the tax consequences for buying in my own name?
- What are the tax consequences for buying through a business entity?
- What are the expenses incurred by each option?
- When compared, which option offers the most tax-effective landscape?
Non-US citizens must always pay attention to tax liabilities when buying US property, as any unexpected move may result in dramatic tax consequences. In any case, make sure to consult with a knowledgeable attorney for an individual assessment.
Can a Non-US Citizen Buy Property in USA? – Closing the Transaction
Generally, most non-US citizens buying US property tend to pay all-cash. While all-cash transactions are legal, US law requires that any cash transaction over $10,000 must be reported to the federal government to demonstrate the funds were obtained legally.
As the majority of non-US citizens do not have an established credit history in the country, finding a mortgage company willing to accept financing is not an easy task. However, buying all-cash permits buyers to save financial resources on mortgage application fees, loan origination fees, and home appraisals.
Non-US citizens typically must pay for title search and insurance in addition to the down payment for the property. Other expenses involved include legal fees.
If the non-US citizen is unable to attend the transaction’s closing, it is possible to work with an attorney to draft a non-durable power of attorney. A power of attorney is a legal document to authorize a person to represent you and act on your behalf, hence successfully closing the deal.
Foreign property owners tend to face more challenging tax liabilities than US citizens. Therefore, it is crucial to rely on a well-versed attorney that understands tax rules to protect your interest(s) in the process.