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Alexander Pfleger
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- To purchase a home, you must be ready to substantiate who you are. You will need an Individual Taxpayer Identification Number, even though you don’t need to be a US citizen. This number is assigned by the Internal Revenue Service to foreign nationals who need to file income tax returns, something you will have to do when buying real estate in the US. In addition, you will need a valid foreign passport, or two or more current photo identifications such as a driver’s license to verify who you are and your country of origin. We also recommend you check out US visa requirements before you purchase.

- Almost all new real estate listings in the US are posted to the Multiple Listing Service within 24 hours ensuring that active listings are available to all agents. - All sales commission is paid by the seller, and then divided equally between all agents involved. Most of the time commissions vary from 2 to 5 percent.

- The past few years’ banks have made it possible for international buyers to get financing again. If qualified, foreign buyers may be able to get financing for properties with a 30% down payment. It is best to check the specific state requirement in the state you plan to buy in.

- Some banks will require that a buyer hold a large deposit with their bank. Many will also want to see proof of 12 months’ reserves to cover mortgage payment, maintenance, and taxes. This is in addition to the large deposit as highlighted above.

- Alexander Pfleger Real Estate can help find a lender and mortgage terms that suit your needs., however the majority of foreign buyers pay all-cash.

- International buyers should keep in mind that certain documents may be needed so it’s smart to get everything in order before looking at homes. Here is a list of these documents:
• Proper Visa or Foreign Passport Copy • Sufficient Closing Funds • Verification of Rent/Mortgage Payments • Confirmation of Employment • Credit References

- Keep in mind every US lender requires borrowers to purchase homeowners insurance.

- Tax liability is different for foreign nationals than it is for US residents. Therefore, federal tax on long-term investments is 30% for foreigners. Also, under the Foreign Investment in Real Property Tax Act of 1980, income tax is withheld directly after a non US-resident sells. The rate varies from state to state, but the federal rate is a flat 10%. Lastly, the IRS requires a “Statement of Withholding on Dispositions by Foreign Persons of US Real Property Interests.” Many states will request a “Nonresident Real Property Estimated Income Tax Payment Form.” Please seek the expertise of a professional tax accountant for help with these forms.

- It is important to speak with a Tax Specialist in your home country, as international buyer’s overall tax liability will also differ country to country based on the home country’s tax treaty with the US. The capital gains rate for US residents is 20% if the property was owned for more than one year, but it could be higher if you are from certain countries. Definitely check with your local tax adviser before you buy.

- US law requires that the foreign nationals “elect” to pay US income taxes on any net income earned from rental property. If this election is not made in a timely manner and the correct forms are filed with the IRS a tax of 30% gross rental income will be demanded. Keep in mind you can deduct expenses from rental income such as mortgage interest, property taxes, etc.

- If you cannot be in the US when the home officially closes, the owner can provide his representation with “Power of Attorney.”

- International buyers should consult a tax adviser who specializes in international law if they are thinking of buying under the name of a domestic US company or Limited Liability Company.

- The US Estate Tax is around 45% if a non US-resident dies. This can be prevented if the international buyers sets up a Limited Liability Corporation, which owns the property and a Foreign Corporation to own the LLC.
 

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Office: 858-483-4687 | Cell: 619-339-7334 | Email: [email protected] | CA BRE #01043581 | NMLS# 373603

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