U.S.A. Real Estate (Property) Practices
U.S.A. Real Property (Estate) Practices
Ownership of Real Property
There are no restrictions on the ownership of real property, or often referred to as real estate, by a foreign national in the U.S.
Both U.S. residents and non-U.S. residents are afforded the same legal rights and privileges and there are very few differences between a U.S. resident or foreign national when purchasing real estate.
Representation
In the U.S., real estate commissions are paid by the seller, and in most residential transactions, there will be an estate agent representing the seller and another agent representing the buyer.
In many municipalities, real estate records, lien and mortgage information is completely transparent and available via online public records. The State of Texas is a non-disclosure state limiting the amount of data available.
Cost to Purchase
Unlike many other countries, the purchase price of a residential property includes much of the non-real property items or personal property such as appliances, light fixtures, window treatments, unless specifically excluded in the purchase and sale contract.
The initial purchase costs include cash or financing to purchase the real property, closing costs, taxes, insurance, and agency commissions.
U.S. Investment Visas
Historically, and especially over the past few years, Austin has been the recipient of waves of immigrants from all over the world whether permanently or on a temporary basis via an investment visa.
The two most common options that most of our clients qualify under are either the EB-5 Immigrant Investor visa or the E-2 Treaty Investor visa.
Mortgage Financing for Foreign Nationals
Most of the large U.S. banks and local Austin banks offer purchase mortgages and refinance mortgages to foreign nationals. Each bank, or mortgage lender, will offer different types of loan products, maximum loan limits, underwriting criteria, reserve requirements and so on.
When you are ready to see if purchasing a property via financing is right for you, we can help familiarize you with the process and general guidelines.
Investment Property
There are many reasons to invest in real estate, however, the two most important factors should be for currency and portfolio diversification benefits and to act as a hedge against inflation.
Several studies have proven that global diversification in investment properties results in both decreased volatility and increased return on investment of your portfolio.
Evaluating Condominiums
As the owner of a condominium, you are much like a shareholder in a corporation. Condominiums are governed by a set of regime documents that include bylaws, rules and regulations, and the declaration of condominium.
You should learn about the governance of the condo and pay particular attention to the rules and regulations, financial statements, and occupancy restrictions.
Tax Related Matters
The sale or transfer of U.S. real property by a foreign national is subject to a fifteen percent (15%) withholding tax of the purchase price at the time of closing, known as the Foreign Investors Real Property Tax Act (FIRPTA).
Although it is not an added tax to foreign nationals, there are exemptions and structures that one can employ at the time of purchase to avoid FIRPTA later.
Post Closing Considerations
Prior to closing and completing your real estate transaction, we suggest that you start to plan and take the necessary steps to manage the ownership and enjoyment of your new Austin property.
These steps include payment of the mortgage payment (principle and interest) if you did not pay cash for the property, real estate taxes, property insurance, monthly condo maintenance fees (service charges), any renovations you desire, and property management, if needed.
Common Mistakes Foreign Buyers Make
Although foreign buyers are afforded the same rights and privileges as that of U.S. citizens and residents, there are a few mistakes that they commonly make.
These typically include dealing with Foreign Investors Real Property Tax Act (FIRPTA), U.S. estate taxes, property insurance, rental income and determining if you meet the IRS substantial presence test in any given calendar year.
U.S. Free Trade Zones
United States has 14 free trade agreements with 20 countries.
North America region:
Canada and Mexico with NAFTA
Asia Pacific region:
Australia, South Korea and Singapore
Middle East and North Africa:
Israel, Jordan, Bahrain, Morocco and Oman
South America:
Chile, Colombia and Peru
Central America:
Dominican Republic Free Trade Agreement (CAFTA-DR) collectively includes Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua.
Panama,
although not part of CAFTA-DR, has a separate free trade agreement with the United States.
What didn't I answer?
Whether you are relocating to Texas from another part of the world or planning an adventure outside the U.S., I can provide you access to an exclusive network of agents that specialize in global real estate.
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"Christine is the BEST! She is extremely professional and thorough. She dots every "i" and crosses every "t". She has great suggestions and is easily accessible, with answers and ideas for any questions/concerns that we have. We highly recommend Christine if you're wanting to get it done, and get it done right."
Anne & Doug Miller
New Braunfels, Texas
"If you want your clients to be cared for and represented in the utmost I would recommend you refer your clients to Christine Wren. Christine and I are colleagues in different markets, and met through a referral network group. She communicated effectively with our mutual clients never missing a beat, as well as, kept me informed throughout the entire process as we coordinated the sale of our clients home on my end. Christine is passionate about finding the right solution and on the clients time table, not her own. She has the knowledge to work with many cultural sensitivities and requirements. I would highly recommend Christine Wren to be your Austin, Texas Realtor®"
Afshan Moosa
Dallas, Texas
I feel very lucky that I was referred to Christine when I was looking to purchase a home. Christine is very knowledgeable and made a complicated process flow easily. She went above and beyond what I expected from an agent and is committed to satisfying her clients. I would highly recommend Christine and I hope to work with her again in the future.
Donna Imber
Austin, Texas