-
RSS

Recent Posts

Yurt Dışında Avukata İhtiyacım Var Ama Nasıl?
Terör Olayları Düşen Cirolar ve Yüksek AVM Kiraları
Company Types and Registration In Turkey
Real Estate Purchase in U.S.A.
Foreign country citizen's (real persons') real estate purchases in Turkey

Categories

Buying A Real Estate In Turkey
Buying A Real Estate in U.S.A.
Company registration in Turkey
International Lawyering
Kira Hukuku
Yurt Dışı Yatırım/KOBİ
powered by

My Blog

Buying A Real Estate in U.S.A.

Real Estate Purchase in U.S.A.

Through our strong links we are able to assist clients wishing to purchase real property or start a business in more than 20 jurisdictions over the world.
Please find brief information on investing in real property in the U.S. Please do not hesitate contacting us should you need more information.

 
Introduction
The real estate market in the United States has made strong indications of recovery following the “bubble” and “crash” of the market in the previous decade.  Accordingly, investment in real estate has reestablished its popularity among United States citizens and international buyers alike. According to the National Association of Realtors, international buyers purchased approximately $104 billion in United States residential real estate from April 2014 through March 2015, across all 50 states. Property sales in the United States to foreign buyers amount to approximately 8 percent of total existing home sales in dollar volume. Whether a prospective buyer is an international investor, a “snowbird,” or a first-generation immigrant living in the United States, purchasing in an unfamiliar market can be daunting.
Unlike some countries which only allow real estate sales to those with citizenship in the country, the United States treats sales of real estate to foreigners essentially identically as sales to citizens. Some limitations may be imposed by homeowners associations, condominium associations, cooperatives, or other forms of community associations. For example, Housing cooperatives, or “co-ops,” often have rules prohibiting foreign ownership by generally requiring that a buyer's source of income be from the United States and that the majority of the buyer's assets be kept in the United States.
Buying real estate in the United States does not give foreign owners any rights or privileges regarding legal stay or status. A person interested in staying in the states longer than allowed by a standard visa, should contact an immigration lawyer.
The manner in which United States real estate transactions are carried out may differ from a buyer’s home country. Each state in the United States has its own set of rules regarding the purchase of real estate, including the type of purchase and sale contract used, the method of closing the sale, and the duties and titles of the individuals involved. Foreign investors can purchase property directly in their own names, or through some sort of business entity, such as a domestic corporation, foreign corporation, limited partnership, joint venture, real estate investment trust, or limited liability company.
Financing
It is possible for a foreign buyer to obtain financing for a purchase. However, foreigners are more likely to pay higher interest rates and be required to make larger down payments. Qualified foreign buyers with a 30 to 40 percent down payment can often obtain financing for their United States real estate purchases. Lenders may also require foreign buyers to have a specific minimum amount on deposit with the bank or may set loan limits. This is due to the relative risk inherent when lending to a foreign buyer, such as obstacles to serving the buyer with legal process and accessibility to a foreign buyer’s assets, in the event of default on a loan.
Process and Requirements
The basic sale transaction for real estate property consists of the buyer and seller entering into a purchase and sale agreement, or contract, which outlines the terms of the sale, such as price, terms and details of the transaction, and the closing date. As part of the process, a title search is also performed, which is the process of retrieving documents evidencing events in the history of real property to determine relevant interests in and regulations concerning that property. The closing date is when legal title to the property is delivered from the seller to the buyer. The legal transfer of ownership is by way of a deed, usually executed at closing. The buyer is commonly responsible for paying for the title search and insurance, legal fees, and recording fees, which typically amounts to approximately 1 to 2.5 percent of the total price of the property. 
A foreign buyer will need an Individual Taxpayer Identification Number (ITIN), which is a tax-processing number assigned to foreign nationals who are required to have a United States taxpayer identification number, but do not have one and are ineligible for Social Security numbers. Depending on the buyer’s nationality, the buyer may also need a valid foreign passport, visa, and two or more current photo identifications, such as a driver's license.
A buyer may wish to attend the closing in person, but it is not necessary. If the buyer cannot or chooses not to attend the closing, the buyer may execute a "Power of Attorney." A Power of Attorney is a written document authorizing another person to represent the buyer at the closing and sign all necessary documents on the buyer’s behalf. Alternatively, some transactions are conducted by way of a “mail away” closing, whereby the necessary documents are executed, exchanged, and returned between the parties, all via mail.
Tax Implications
A foreign property owners' tax liability in his home country will vary depending upon where the purchaser is from and whether that country has a tax treaty with the United States. The Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) is a United States law governing the withholding of income tax when property is sold, exchanged, gifted, transferred, or liquidated by a foreign person. The Internal Revenue Service withholds 10 percent of the proceeds of the transaction, which may also be subject to withholding by the state.
The United States government requires that foreign nationals pay federal income taxes on any net income (rental revenues less expenses) received from rental property. Certain deductions are allowed to reduce tax liability, such as mortgage interest, common charges, property taxes, and depreciation. If tax returns are not filed in a timely fashion, a tax of 30 percent of the gross rental income may be assessed. Such income may also be subject to taxation by the state government.