Can a Non-U.S. Citizen Buy Property in the USA?

Investing in real estate in the United States can be an appealing prospect for non-U.S. citizens, offering opportunities for both residence and investment. However, many non-U.S. citizens wonder if it is even possible to purchase a home in the United States without citizenship. The short answer is: yes, non-U.S. citizens can purchase homes within the United States and may even be able to qualify for a mortgage. But there may be more paperwork involved and steps to take before the purchase can be completed. Evolution Tax and Legal is breaking down the home buying process for non-U.S. citizens: including the types of properties available, the process of obtaining a mortgage, and the key steps involved in the property-buying journey. Additionally, we’ll discuss the rules, restrictions, and essential considerations for non-citizen investors to consider before looking at listings.

What Type of Property Can a Non-Citizen Buy?

Any non-U.S. citizen, including permanent residents, temporary residents, non-residents, refugees, asylum seekers, and individuals who are recipients of the Dreamer program, or DACA, can buy property in the United States. For individuals within these categories, there is no legal restriction preventing the purchase of property or a home, whether it is for residential purposes or commercial interests. Non-citizens have the flexibility to purchase various types of properties in the United States. The options include:

  • Residential Properties: Non-citizens can buy residential properties, including single-family homes, condominiums, townhouses, and multi-family dwellings. These properties can serve as a primary residence, vacation home, or rental investment.
  • Commercial Properties: Investors looking for business opportunities can explore commercial real estate. This includes office buildings, retail spaces, industrial properties, and other commercial ventures.
  • Investment Properties: Non-citizens are not restricted from investing in real estate for rental income or capital appreciation. Investment properties can provide a source of passive income and potential long-term gains.

Getting a Mortgage as a Non-U.S. Citizen

While obtaining a mortgage as a non-U.S. citizen may present some challenges, it is certainly possible. Options for mortgages may vary from lender to lender, but some key considerations to think through before speaking with a lender include:

  • Documentation Requirements: Non-citizens will need to provide certain documentation, such as a valid passport, visa, and proof of income. FHA and conventional loans may require Social Security numbers and EAD, or employee authorization documents. If buyers do not have an EAD, they may be able to submit an employment visa as proof of their right to work. Each situation is different, but typically the H-1B and other series-H visas, in addition to the Canadian and Mexican NAFTA series, E series, G series, L series, NATO series, and O series visas, will qualify as proof of the right to work within the United States and can be used in place of employee authorization documents. Lenders may also require a U.S. credit report or alternative credit references.
  • Down Payment: The down payment requirements for non-citizens may vary. Typically, a larger down payment is expected, often ranging from 20% to 30% of the property’s purchase price.
  • Mortgage Terms: Non-citizens may have access to various mortgage options, including fixed-rate and adjustable-rate mortgages. Exploring different terms and interest rates is crucial to finding a suitable mortgage.

How to Buy Property as a Non-Citizen

The steps to buying property as a non-citizen will be relatively similar to the advice we would provide to U.S. citizens: work with seasoned professionals who you trust, and have your documentation prepared and financing planned prior to submitting an offer. More detailed steps to take in order to find your property within the U.S. include:

Find an Experienced Real Estate Agent

Engaging the services of an experienced real estate agent is crucial for non-citizens navigating the U.S. real estate market. A knowledgeable agent can provide valuable insights, help identify suitable properties, and guide through the intricacies of the buying process.

Hire Legal and Financial Professionals

Non-citizens should consider hiring legal and financial professionals who specialize in real estate transactions. An attorney with expertise in international real estate law can ensure compliance with regulations, while a financial advisor can offer insights into tax implications and financial planning. The Orange County international tax lawyers at Evolution Tax and Legal are dually-certified to understand the legal and financial implications of purchasing a home as a non-citizen. Contact the team to learn more about how we can help you throughout your purchase.

Understand Your Financing

Understanding the financing options available is essential. Non-citizens may explore financing through U.S. banks, international lenders, or alternative financing sources. Thoroughly reviewing terms, interest rates, and repayment schedules is critical.

Find Your Property

Once financing is in place, non-citizens can begin the property search. Factors to consider include location, property type, potential for appreciation, and the intended use of the property. A realtor will help ensure your needs are met and the property meets the standards and codes of the area.

Complete the Transaction

The property transaction involves making an offer, negotiating terms, conducting inspections, and finalizing the sale. Non-citizens should work closely with their real estate agent and legal professionals to navigate each step and ensure a smooth closing process.

Additional Rules & Restrictions for Non-Citizens

While non-citizens can certainly buy property in the USA, there are additional rules and restrictions to be aware of:

  • Visa Status: Non-citizens must have a legal visa status to purchase property. Different visa categories may have varying restrictions on property ownership.
  • FIRPTA: The Foreign Investment in Real Property Tax Act (FIRPTA) imposes withholding taxes on the sale of U.S. real estate by non-resident aliens. Understanding FIRPTA regulations is crucial to avoiding unexpected tax liabilities.
  • Estate Tax: Non-citizens may be subject to U.S. estate tax on the value of their U.S. property upon death. Seeking guidance on estate planning can help mitigate potential tax burdens.
  • State-Specific Regulations: State-specific regulations may impact property ownership for non-citizens. It’s important to be aware of any state-level requirements or restrictions.

The prospect of non-citizens buying property in the USA is both feasible and attractive, offering opportunities for residence, investment, and financial diversification. Understanding the types of properties available, navigating the mortgage process, and following a systematic approach to property acquisition are crucial for a successful real estate venture. Engaging with experienced professionals, both in real estate and legal/financial domains, ensures that non-citizens make informed decisions and comply with regulations. As the U.S. real estate market continues to be a global attraction, non-citizens can seize opportunities with careful planning and strategic execution.

January 27, 2024

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