Real Estate Advisors

  • Win Capital

International Investors and Investing in U.S Real Estate

International Investments

Are you planning to purchase a real estate property in the United States, but hesitant to do so because you do not know if you as a foreigner? Thus, if you're a new real estate investor who has thought about investing in U.S. real estate but have been due to a nagging feeling about the uncertainty of your investment as a foreigner, guess what, you're safe and secure. Because, according to the National Association of Realtors, research shows that China alone, spent $22 billion on U.S. housing in the last 12 months, much more than they spent the year before, in another research, Florida has the largest number of foreign real estate investors in the U.S., with 41% purchasing vacation homes, 25% making a dual use purchase (vacation home/rental property) and 23% investing in rental property. Thus, the research show a tremendous rise in foreign investment considering the fact that other countries are also investing.

Thus, U.S. real estate is a profitable investment for foreigners. As American real estate has been for people, under the foundation of the "American Dream of prosperity." More and more immigrants from around the world than any other nation on earth wanting to be a part of that dream. Hence, there are several reasons for this rise in demand for US Real Estate by foreign Investors, but the primary attraction is the global recognition of the fact that the United States is currently enjoying an economy that is growing relative to other developed nations. Couple that growth and stability with the fact that the US has a transparent legal system which creates an easy avenue for non-U.S. citizens to invest, and what we have is a perfect alignment of both timing and financial law... creating prime opportunity! The US also imposes no currency controls, making it easy to divest, which makes the prospect of Investment in US Real Estate even more attractive.

Why are Foreign Real Estate Investments Safe and Profitable?

Today, there are several means of investments; however, the safest you can make right now is investing your money in real properties. This is another good reason aside from the fact that you can make a pretty nifty profit, if you like, particularly now with the widespread property foreclosures and seemingly continuous US dollar devaluation. This is especially true if you are going to use the euro when making your investment.

Why is US real estate investment safe for foreigners?

It is an undeniable fact that stock investments are not a safe avenue because of its volatility. The recession has not only affected the US economy; the same recession has dramatically affected worldwide stock investments. Stocks values are dropping. It is also a fact that even without the current economic situation, stock values fluctuate. On the other hand, real estate investments are pretty stable if you would compare it to stock investments - or even bond or mutual fund investments. With real estate investment, you'd be putting your money in an investment that would grow in value as years go by.

FIRPTA Requirements

FIRPTA requires any person acquiring real estate in the U.S. to collect a withholding tax equal to 10% of the gross sale price of the property in question if the seller is a foreign real estate seller or investor. In order to be considered a "foreign person," the seller must be either a nonresident alien individual, a foreign corporation not treated as a domestic corporation or a foreign partnership, trust or estate.

The funds must be forwarded to the IRS within 20 days of the closing. The paperwork, filing and actual remittance of funds can often be handled by the escrow agent that is used in the property transaction. However, in order for the funds to be forwarded appropriately, both the buyer and the seller must have a United States taxpayer identification number. This is significant because not all foreign real estate investors have a U.S. taxpayer ID and obtaining one is not a quick process.

Hence, if a foreigner is purchasing a property in the United States with the intention of selling it, you should begin the process of getting your taxpayer ID number as soon as possible. If you intend to purchase property in the United States, you should understand that in addition to obtaining a Tax Identification Number or Taxpayer ID Number and you will be required to file tax returns when you sell the property to comply with FIRPTA.

Benefits of investing in U.S Real Estate

U.S state government supports foreign investments and along the line has formulated various tax breaks to encourage foreign investment on real estate. Many of these tax breaks are not available in many countries. In fact, most countries would frown at foreigners owning real properties within their territory.

Foreign real estate investment in the United States is open to everyone. As long as you can afford to buy the property or at least comply with the mortgage requirements and payments, you can secure for yourself a pretty good property in the United States. Again, with the current economic situation of the United States, this is the perfect chance for you to invest.

Houses for sale

Another great benefit that you can take advantage of is the availability of mortgage financing. Lenders have opened their doors to foreign investors who are looking into purchasing a property. So, you don't have to deplete your bank account. You can actually secure a mortgage loan and gradually pay it off.

Conclusive, if a foreigner is considering buying a property in the United States, they’ll need to secure the services of a real estate attorney, as an attorney will help them with the legal issues concerning their purchase. Hence, it is tempting to forego securing the service of a lawyer to save money, but this could cost them a lot of money in the long run. They should have thoroughly checked out their credentials, profile, history of successful cases handled by him, and other factors that would influence their decision. It will also be great to check online and look for a lawyer working within the state where you are considering purchasing a property.

3 views0 comments