Are there additional fees I will need to pay at closing?
Yes, the buyer is typically responsible for paying for the title search and insurance, legal fees and recording fees, amounting to an additional 1 percent to 2.25 percent of the total cost of the transaction. On a $300,000 home, that amounts to another $3,000 to $6,750. There is no purchase fee in the U.S. for buying a property.
Can I pay for my property by paying property cost without mortgage?
Yes, all-self-paid up (through via transfer from your saving/trust/company current account only) purchases are permitted, but U.S. law mandates that any transactions over $10,000 be reported to the federal government. The requirement for reporting involves everyone connected to the transaction (purchaser, real estate agents, attorneys and title companies). The government wants to know how you earned the money and that it was legally obtained.
Cash (Self -Paid up) buyers can potentially save money on mortgage application fees, loan origination fees, appraisals and title insurance.
Do I have to travel to the U.S. for the closing?
No, it is not necessary to travel to US for closing your property deal. While you may very well want to attend your real estate closing, it is not mandatory. In the event that you cannot or choose not to attend your closing, you must execute a “Power of Attorney”. This is a written document authorizing another person to represent you and sign on your behalf.
Do I need to become a citizen to buy a home in the U.S.?
No, you won’t need a U.S. citizenship or a green card, but you will need an Individual Taxpayer Identification Number (ITIN). That’s a tax-processing number assigned to foreign nationals who are required to have a U.S. taxpayer identification number, but do not have one and are ineligible for Social Security numbers.
An ITIN can be issued by the Internal Revenue Service or by a Certified Professional Accountant approved by the IRS. You will have to fill out a W-7 Form (in English language) in order to request an ITIN. On the W-7 form you will be required to give a valid reason for your application.
Depending on your nationality, you may also need a valid foreign passport, and two or more current photo identifications, such as a driver’s license.
How does international taxes work?
Normally the taxes are dependent on the country in which you are buying Real Estate and the country you are from.
How will a U.S. real estate purchase affect my taxes?
A foreign property owner’s 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. Consult a tax attorney familiar with your home country’s treaty to get answers to tax-related questions.
The United States government requires that foreign nationals pay U.S. income taxes (state and federal) on any net income (rental revenues less expenses) received from rental property. If tax returns are not filed in a timely fashion, a tax of 30 percent of the gross rental income may be assessed. Even if you’re incurring losses in the early years of your investment and you don’t owe any taxes to the government, you must still file your tax returns in a timely manner or be subject to financial penalty.
Is there a type of property I can’t purchase in the United States?
Foreign buyers are eligible to buy single-family homes, condominiums, duplexes, triplexes, quadraplexes, commercial office space and townhomes.
Housing cooperatives or co-ops often have rules prohibiting foreign ownership. That’s because co-ops generally require 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 U.S.
Several important U.S. real estate practices worth noting:
- In the United States, real estate listing information is shared by agents using multiple listing services, and consumers can access that same information using real estate sites. In many other parts of the world, real estate is a fragmented business and buyers have to go from agent to agent to find a property.
- In some countries, it is typical to pay a fee to the agents who are scouting properties on your behalf and showing you around.
- In the United States, real estate agents need licenses to operate. The licensing laws of each state differ regarding how much education is required, the type and depth of licensing examinations, and whether continuing education courses are required once an agent becomes licensed. The licensing system was designed to ensure real estate agents are qualified to guide consumers through the maze of finding, evaluating and financing real estate.
- Foreign buyers will also want to give consideration to issues such as currency exchange rates, international wire transfers, banking systems, multi-national taxation and accounting issues, and import/export restrictions regarding currency and household goods.
Should I purchase U.S. property in my name?
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.
How the property will be used should play into your decision. Additionally, the structure through which you purchase your property can have dramatic tax consequences. Your real estate attorney and accountant should be able to provide counsel concerning your options.
What are the benefits of Property / Home Inspection in US?
A home inspection is a limited, non-invasive examination of the condition of a home, often in connection with the sale of that home. Home inspections are usually conducted by a home inspector who has the training and certifications to perform such inspections. The inspector prepares and delivers to the client a written report of findings. The client then uses the knowledge gained to make informed decisions about their pending real estate purchase. The home inspector describes the condition of the home at the time of inspection but does not guarantee future condition, efficiency, or life expectancy of systems or components.
What Are the Duties & Roles of a Title Company?
Title companies play several key roles in common real estate transactions. Title companies generally act as the combined agent of the insurance company, the buyer, the seller, and any other parties related to a real estate transaction, such as mortgage lenders. The title company reviews title, issues insurance policies, facilitates closings, and files and records paperwork.
Title companies have sophisticated real estate title search and review departments. These departments review the public records relating to real estate, in order to inform all interested parties of the status and condition of title to the subject property. Title companies generally provide this information to each of the parties in the form of a preliminary title report, or commitment for title insurance. Title companies also provide title research information related to foreclosures and other types of legal action involving real property.
Title companies are often the closing agents for real estate transactions. This means the title company is an agent of each party to the transaction. In its role as agent, the title company obtains signatures on all of the closing documents, and the title company also receives and distributes payments related to the conveyance transaction. After the parties have signed all the documents, the title company will record documents that need to be recorded, such as deeds and mortgages, in the local county land records office.
Title companies also commonly act as escrow officers in connection with real estate transactions. An escrow officer holds documents or money as a part of the transaction and according to the instructions of the parties. For example, the purchaser of real estate will give the title company the money necessary to pay the purchase price, while the seller will give the title company a signed deed to the property. The title company, acting as escrow officer, only releases the deed and the money according to the written instructions of the buyer and seller.
Title companies issue policies of title insurance in behalf of title insurance companies. In most cases, the title company that issues the policy is not actually the insurance company. Instead, the title company acts as an independent agent of the insurance company and simply receives a commission for issuing the title policy. The actual premium goes to the insurance company, and the insurance company bears the risk of any loss under the policy. Title Company merely facilitates the paperwork for issuing the insurance policy.
What Does a Property Management Company Do?
Management companies deal directly with prospects and tenants, saving you time and worry over marketing your rentals, collecting rent, handling maintenance and repair issues, responding to tenant complaints, and even pursuing evictions. Plus, a good management company brings its know-how and experience to your property, giving you the peace of mind that comes with knowing your investment is in good hands. Finally, a management company is an independent contractor, so you avoid the hassles of being an employer.
What is FIRPTA?
FIRPTA refers to the Foreign Investment in Real Property Tax Act of 1980. This ruling authorizes the United States to withhold income tax when property is sold, exchanged, gifted, transferred or liquidated by a foreigner. The Internal Revenue Service takes 10 percent of the proceeds and the state government will also take a percentage.
What is the cost of getting a Home Inspection done in US?
The cost of an inspection varies depending on location and the size of the home. “A more thorough report for a larger property will likely cost more than a report for a one-bedroom condo Usually the cost of property inspection could run anywhere from $350 to $1,000.
What should I expect from my first meeting with my real estate agent?
This is the perfect time for you to tell your agent your budget as well as exactly what you’re looking for in a property. It might also be a good idea to take the time to tell your agent about how the home-buying process works in your native country and ask about any differences on the U.S. market.
The more you know, the less stressed you’ll be when you enter into the negotiation process.
When Should You Hire a Property Management Company?
Hiring a property management company has many advantages. Consider the following factors to determine if hiring a property management company would be a good decision for your investment.
You should consider hiring a property management company if:
You have lots of properties or rental units. The more rental properties you own and the more units they contain, the more you’re likely to benefit from a management company.
You don’t live near your rental property. If your rental property is located far from where you live, hiring a property management company can be invaluable in dealing with the many issues that you will not be able to handle from afar.
You’re not interested in hands-on management. Many landlords look forward to the challenge of finding good tenants and the rewards of maintaining a safe and attractive property on their own. But if you view rental property ownership strictly as an investment and want little or nothing to do with the day-to-day management of your properties, consider hiring help to manage your property.
Your time is limited. Even if you enjoy hands-on management, you may not have much time to devote to your business, especially if land lording isn’t your day job. And if you prefer to spend your time growing your business, including searching for new properties, arranging financing for renovations, or changing your business structure, then a management company may be a good way to spend your money.
You can afford the cost. Hiring a property management company is an attractive option if you can afford the fees. When interviewing companies, expect to hear quotes ranging between 5% and 10% of what you collect in rent revenue. If it’s a down market and you’re able to manage things yourself (or with the help of a resident manager or other employees), you may want to keep doing so until the market turns around.
You’re suddenly inundated with management tasks. If your business is growing, at some point you may find that you need a substantial amount of help to manage everything properly. At that point, it might make sense to hire a management company.
You don’t want to be an employer. If you hire a resident manager or other employees to help with your property, you become an employer. You’ll have to handle payroll and deal with a host of other legal requirements and considerations. But, because a property management company isn’t your employee (it’s an independent contractor), and neither are the people who work for the company, by using one you avoid the hassles of being an employer.
Will I need to hire a real estate lawyer?
Although not mandated, you may want to seek the services of a real estate attorney to help with any legal issues or questions you may encounter along the way. A real estate lawyer can review the sale contract for you, check the title company and other documents relating to your purchase, and advise on legal and tax issues concerning your property. You can also appoint a title company to take care of your property purchase transactions.
Why invest Internationally?
Investing internationally simply opens up a whole host of new options. Instead of being restricted to the offerings of one single geographic location, which could possibly be suffering an economic downturn, having a broader set of choices means a much better economic outlook.