In the United States, anyone may buy and own property regardless of citizenship. But while many foreigners own permanent properties, vacation homes and/or investment properties in the states, the rules of buying and selling can be tricky.
Purchasing property is easiest for foreign buyers who hold a green card, work visa, or other document proving residency or employment in the U.S. The buyer must also fall into one of three categories of residency: a lawful permanent resident (LPR) (someone who holds a green card); a nonpermanent resident alien (someone legally authorized to live and work in the U.S. on a temporary basis); or a refugee/asylee (someone “unable or unwilling to return to [their] country of nationality because of persecution or a well-founded fear of persecution”).
On the whole, most U.S.-based mortgage companies prefer lending to citizens because it is less risky than lending to non-citizens. Additionally, the lenders tend to look at a borrower’s U.S. credit history first to determine eligibility. If a buyer is not a U.S. citizen, a mortgage company will have to look for another way to analyze the risk of lending to these buyers, which in turn, can greatly extend the time it takes to buy a home. In short, the easiest route to property ownership for a non-U.S. citizen is paying in cash. It is also important to note that mortgage rates and eligibility will vary by lender and interest rates may be higher for non-U.S. citizens.
What happens to the property should the owner decide to leave the United States? This depends on whether the property owner is a U.S. citizen or a U.S. resident. Under U.S. tax law (F.I.R.P.T.A), any non-resident alien is subject to withholding for tax purposes of 15% of the gross sales price and the withheld amount is required to be forwarded to the IRS within 20 days of closing. Applying for a refund can be done by filing U.S. tax returns or Form 8288-B (Application for Exemption from Withholding).
While purchasing and/or selling a home in the U.S. is absolutely possible for non-U.S. citizens, the process can be complicated. It is important to have a knowledgeable lawyer who understands these complications and can ensure the home buying process is carried out efficiently and correctly. For immigration and real estate matters, contact our firm and ask to speak with Paul H. Schultz. For general real estate matters, ask for Paul H. Schultz or Robert R. Atkins, Jr.