Yes, it is possible to own a property in the United States even if you’re a non-citizen. You can even get a mortgage to finance a property. Although it may be a bit complicated – and expensive, purchasing a property in the Land of the Free is actually more possible compared to doing so in other countries.
If buying a US property is within your future investment plans, here is a quick guide to the basics of purchasing US real estate as a non-citizen.
You might be surprised how little hassle it takes to procure a condo or a housing unit in the United States. Save for some limitations such as when a unit is under strict rules of certain community associations barring foreign ownership, foreign buyers are treated similarly as any domestic, citizen buyer.
What requirements are necessary for a non-citizen, alien, or non-national to buy a US property?
You will be asked for more or less the same requirements as a citizen when you initiate property purchase. Many foreign buyers usually pay cash for their purchases but if you opt to get a loan to pay for the home, your lenders will require you to forward additional documentation, typically the following:
- your green card with your social security number; or
- your temporary residence status, work permit, and social security number
In order to secure their interests, lenders will want to make sure that you will be able to pay for the money you owe. Most would want to know the details of your employment arrangement and your credit history. Some also prefer that you have stayed in the country for a couple of years first before the application date.
When it comes to financing, foreign buyers are usually faced with higher interest rates, and are required to put down more for down payment (usually 40 percent) than a citizen (20 percent). More security makes sense, since should the foreign buyer default, it would be harder to serve them with a legal process and their legal assets will be more complicated to tap.
The case of closings
It would be extra hassle for a foreign buyer to fly in and out of the country just to settle his or her financing process. So the law allows for the foreign buyer to provide a “Power of Attorney” to an agent who can represent him or her in the US and make the necessary engagements to conclude the purchase.
What about taxes?
Taxes are a given. And if you’re a foreigner buying a property in the US, you may be subject to differing tax laws both in your country and those in the US. You’re more likely to end up paying taxes in the two countries, depending on how the laws are structured regarding property transactions.
If, however, you are able to make the 40 to 50 percent loan down payment, you can avoid paying income taxes on any rental income gained from the property for the first 10 to 15 years.
When selling, a foreign seller will take 10 percent of the gross purchase price withheld by the IRS. This amount will be dependent on many factors such as the items in the foreigner’s tax return. Possible additional payments or a refund may be due if they file their tax returns in the US for that year.
The above-mentioned are only the basics but are fundamental in helping you get started with your plans. For further guidance, consult a legal professional who can help you make arrangements on the procurement of the property.