Investing in real estate as a non-US resident has several factors involved, such as your investment goals, the amount of capital investment, your legal status, etc. Keep reading to find out the essentials of US real estate investment for foreign nationals.
How to Invest in Real Estate in the US as a Foreigner – The Basics
If you are not a US citizen and do not have a green card, you are considered a foreign national under US law. It is fundamental to understand that:
- There is no US citizenship or lawful permanent status requirement to hold US real estate titled in your name
- There is no US citizenship or lawful permanent status requirement to own US real estate through a business entity (e.g., C-Corp, LLC, etc.)
- Purchasing real estate in the United States will grant no eligibility for lawful permanent status (green card) nor change your legal status
To own US real estate as a foreign national, you must apply for an Individual Tax Identification Number (ITIN). This number is used by the Internal Revenue Service (IRS) to keep track of federal tax reports of foreign nationals who do not qualify for a Social Security Number (SSN).
Another crucial aspect of owning real estate in the United States is tax law. The US tax system is complex, as different forms of ownership may result in countless legal and fiscal implications.
It is fundamental to work with an experienced attorney to understand all the tax and legal implications involved with owning US real estate as a foreigner.
How to Invest in Real Estate in the US as a Foreigner – Logistics and Paperwork
The logistics involved in investing in US real estate depend on whether the investor intends to travel to America or handle transactions without setting foot inside the country.
If you do not have plans to be physically present in the United States, a well-versed real estate attorney may represent you in transactions. In such cases, it is possible to prepare a Power of Attorney (POA) authorizing a well-versed lawyer to act on your behalf.
The negotiation process is fundamental to defining which terms will be part of the purchase and sales agreement. Once the terms have been outlined, you may perform due diligence to examine aspects of the property that can affect the transaction’s suitability or value.
If the buyer is not physically present in the country, an attorney may conduct the process to ensure the viability of the deal and identify whether the offer is actually worth the investment.
Purchasing real estate involves original copies of several documents, such as deeds, closing statements, affidavits, and tax returns. Working with an attorney to handle the paperwork and conduct the transaction will take the burden involved in this process from your shoulders.
Many foreign buyers try to work their way through the process by themselves with the excuse of “saving money.” Hiring an attorney not only helps you to save money from unnecessary expenses but also prevents costly errors and potential liabilities.