Many of the people living outside US wish to invest in US real estate but wonder if that is even possible. Yes, it is possible and, in fact, it can be very profitable. Nevertheless, there are very important things that you need to take care of if you are consider this kind of investment. The reason is that any mistake can lead you to get caught in tax implications that can be pretty dangerous from financial and legal point of view.
In order to avoid complications and get the most out of your investment in US properties, you need to work on some very basic steps and make sure that you do not cross the line at any stage.
US citizens buying property while living abroad
Structuring: If you are US citizen living abroad and willing to buy a property in US, you get almost the same privileges as if you are living in US. You can find and buy a property on your name, and you don’t really need to involve an entity in the process (in fact, it would be better if you don’t involve an entity).
Financing: If you are intending to buy a property using mortgage system while living abroad, your status of being a US citizen would be of utmost benefit for you. This is probably because you will be able to get lowest of interest rates. In general, acquiring FHA and VA loans would enable to start with lowest down payment but they have some strictest of rules regarding property occupation. So, you might not be able to occupy a property while living abroad and, hence, you may need to come back and live in that property until the mortgage payment is fully concluded.
Foreign nationals investing in US properties
If you are not a US citizen and you are willing to buy a property in US, good news is that you too can make a purchase here.
Structuring: Contrary to the ability of buying a property in a way a US citizen living abroad would have, you need to have an entity to acquire LLC if you are interested in buying a property in US. Since it is a major and critical step, you need to make sure that you hire a professional because an entity serves as a real link for you getting a property in US. So, the process of entity structuring needs to be flawless.
It would be worth mentioning here that your citizenship has much to do with acquiring of LLC. For the citizens from most of the countries, the process of getting LLC is a standard one. Nevertheless, Canadians don’t really need LLC in this regard.
Financing: Being a foreign citizen, you just can’t qualify for the traditional mortgage at all. It could be a bad news for you because, as I said earlier, mortgage is the cheapest way to acquire a property in US. However, it really doesn’t mean that you should give up. There are some ways you can still get a property in cheaper ways, which are quite similar to the mortgage systems. Option-one is that you pay the cash. However, you don’t get any relaxation if you are short of money. The second choice is to consider private financing. For this purpose, you need to have help from private lenders.
US real estate market is such a lucrative one that it really attracts foreign investors. Above mentioned tip might of some help to ones who wonder where to start from.
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