Why do foreigners buy real estate in the US
Buying Real Estate in the US: Are There Any Restrictions on Foreigners?
As a German or Austrian, is it easy to buy a house or apartment in America?
In almost all states of the USA there are regulations that restrict the right of a foreigner or a foreign company to acquire a right to a property in the USA.
First of all: These immigration restrictions apply in any case to non-holders of American citizenship, a permanent visa or a green card (non-permanent) and an American social security number.
Particularly relevant: Restrictions that make the right to acquire dependent on the legal status of an alien in the USA. Basically, the purchase of a property or a piece of land per se no impact on the right of residence in the USA. The new owner with German citizenship is still subject to the provisions of the tourist visa, see here for details.
Ergo: A stay in the USA as a tourist is possible with or without real estate for a maximum of three months at a time. Nonetheless, some US states require that every foreign buyer - within a certain period of time - the take American citizenship otherwise the right to the house or property falls to the state. Some states even set that Establishing permanent residence within the US. However, it is essential to note that this runs counter to the residence restrictions of many types of visa.
That is also partly limitedAcquisition of agricultural land and undeveloped areas. For example, foreigners and foreign companies are only allowed to acquire certain agricultural areas or areas in which raw material deposits are at least suspected up to a maximum upper limit. Some US states have immigration law restrictions on the size of the area or the duration of ownership. The sense and purpose of this restriction is that predominantly Americans can continue to have access to basic food and raw materials.
In the financing of the purchase price, Germans are usually not treated better or worse than natives by US banks. However, it is advisable to bring a lot of patience, skill and perseverance with you - because the financing process is sometimes longer for foreign buyers than for US citizens. Reasons for this include that the documents and financial statements that the banks require as the basis for their assessment of the financial risk are in a different language and mostly in an unknown format, are based on a different type of calculation or the German buyer requires documents ( according to American standards) are missing.
Good to know: US banks may require foreign buyers of real estate to have a higher equity share for the approval of a mortgage than permanent residents or American citizens who earn an income in the USA and have a social security number.
Limitations on the Property tax: Should you decide to acquire a right to a property, it is advisable to familiarize yourself with the restrictions in the area of taxation. In the United States, in particular, when it comes to property tax, a distinction is made - at least indirectly - between natives and foreigners. First of all, there is no single value: the value of an American property is determined annually by sales of the previous year. The current estimated value of the property is then used to calculate the property tax. This is usually between 1-2% of the specified value. Property tax is the same for American citizens and foreigners - but Americans can register so-called homesteads if the taxed property is their primary residence. This Homestead Exemption "freezes" the value of the property and the property tax can rise to a maximum of 3% - even if the property has, for example, an increase in value of 50%.
In addition to property tax, other tax aspects in the real estate sector should not be forgotten: The Income tax in the case of commercial use of the property through leasing or renting, the Inheritance tax in the event of the death of the owner of a property in the USA, the Gift tax or the Capital gains tax (Capital Gains Tax) when selling a property.
If you have a legal problem in America and need an Attorney at Law, please ask us.
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The Anglo-German legal team of Graf & Partner law firm has been solving German-British and German-American legal issues since 2003. The GP Chambers litigation department advises and represents German, British and US companies in arbitration proceedings and in court proceedings.
Info about US legal issues, US-style contract drafting and handling of German-American inheritance cases in these posts:
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