Purchasing property in the USA as a foreigner could be relatively easy. You would be no different to the domestic purchasers. However, the exception would be buying a co-op. It would be pertinent to mention here that you would not face any special levies or taxes when purchasing a property in the USA, despite being a foreign purchaser.
However, the tax treatment could be considerably different if you consider selling or in the event of your demise. Consequently, you should gather knowledge about FIRPTA, what you should expect to pay in Capital Gains Tax when you intend to sell the property, and how the Estate Taxes would affect you.
Moreover, it would be prudent to get in touch with a broker of any veteran buyer who could guide you through the complicated process. The broker should be competent to introduce you to the local lawyers, accountants, and mortgage lenders. These people would be imperative for your property purchasing needs in the US as a foreigner. They would ensure that your property investment in NYC is a great experience.
What are the taxes levied on foreign property purchases?
You may not come across any special taxes levied on foreign property buyers in the US. Most foreign buyers would pay the same closing costs in the US as other domestic homebuyers. Despite several democratic politicians in the region have considered introducing Pied a Terre taxes for foreign investors, the Republicans did not let them succeed.
It is contradictory to the rest of the world, where foreign buyers are targeted specifically to control property speculation and increase property prices dramatically. Most popular cities across the world have been boasting of a higher average per square foot property valuations than in the US.
However, a bonus would be that foreign buyers could make the most of a specific homebuyer closing credit programs. It would enable the property buyers to make a significant amount of the commission earned from the broker of the buyer at closing.
It should be deemed as a closing gift. It is a legal and non-taxable income. It would not be taxable for US taxpayers according to the IRS. Therefore, it would be in your best interest to consult an experienced agent of a local buyer who has already agreed for providing you with a closing credit.
Rules for foreigners buying property in the US
Find below a few important rules a foreign investor should know when considering purchasing property in the US.
- Look for condos and no co-ops
- Submitting a tax-free at the end of every tax year
- Make plans for avoiding the estate tax
- Consult with a local tax consultant
These aforementioned rules have been deemed important for a foreign property buyer in the US. It would help you enjoy a smooth property buying business.
Only a few nations similar to the US would allow you to invest in their nation. However, real estate investment in the US would offer significant benefits as compared to other nations.