By: Eli Doron, Adv; Yaron Tikotzky, Adv, (C.P.A); Dr.Slomo Nass, Adv, (C.P.A)
Every year, thousands of foreign nationals purchase property in the United States where dynamic real-estate markets present tremendous financial opportunities for buyers at all financial levels.
While there is great upside potential, buying real-estate in the United States as a foreigner requires due diligence, extra care and the right representation.
I am an Israeli citizen living in Israel -
Can I purchase property in the United States?
Not only can Israelis buy property in the United States, each year thousands do. With a healthy economy and robust real-estate markets many Israelis find potential returns from real-estate investments in the U.S. very appealing. They are not alone. According to the latest research from the National Association of Realtors, foreign buyers purchased $153.0 billion of residential property from April 2016 March 2017, accounting for 10 percent of the dollar volume of existing home sales in the U.S. This is an 8% increase from the year before.
While there is an allure to owning real-estate in the U.S., engaging in real-estate transactions always requires a sufficient amount of due diligence and care. This is especially true for international investors.
The type of property in which to invest
The purpose of the property (income, second home, residence for a relative)
How will the property be held (individually, partnership, foreign or domestic business entity)?
Are you paying cash or financing the property – financing may be available for qualified foreign buyers
Tax consequences – while foreign buyers need not maintain residence in the U.S., in order to own property, they are required to obtain an Individual Taxpayer Identification Number. This will lead to a host of tax considerations that need to be addressed considering a buyer’s overall financial objectives. Tax ramifications must be considered vis-à-vis both countries. For example, the Foreign Investment in Real Property Tax Act of 1980 authorizes the U.S. to withhold income tax when property is sold, exchanged, gifted, transferred or liquidated by a foreigner.
General due diligence on the property and the seller. Properties should be inspected and appraised by competent professionals. Special care must be taken when the seller is a developer and the property is not yet complete
Hiring of professionals. Real-estate transactions are governed by the state where the property is located, and each state has its own set of rules. Some transactions require real-estate agents, real-estate lawyers or both.
DTKGG has knowledgeable American lawyers licensed in multiple U.S. jurisdictions to assist with your U.S. real-estate needs.
We look forward to working with you!