How to Buy USA Real Estate as a Foreigner: The Ultimate Guide for International Investors

05/09/2025

Industry Insights International Outlook

Investing in U.S. real estate is an increasingly popular strategy for global investors seeking stable returns and diversification. In fact, international buyers purchased over $53 billion worth of U.S. properties in a recent year【32】. The good news is that there are virtually no citizenship or residency restrictions on buying property in the United States – foreign nationals enjoy the same property ownership rights as Americans【48】. However, buying real estate as a non-resident does come with extra considerations, from financing hurdles and tax obligations to navigating visa options and managing properties from afar. This ultimate guide will walk you through everything you need to know about how to buy U.S. real estate as a foreigner, including legal requirements, investment strategies, step-by-step purchase process, top markets, and tips to ensure a smooth cross-border transaction.

Why Invest in U.S. Real Estate?

The United States offers one of the world’s most robust and transparent real estate markets. Foreign investors are flocking to U.S. property for a variety of reasons:

Economic Stability: U.S. real estate is seen as a safe haven asset. Owning dollar-denominated property helps preserve wealth against currency fluctuations and instability elsewhere【26】. The U.S. economy and legal system provide long-term stability and strong property rights protection.
Strong Returns: Major American cities and growing regional markets have a history of property value appreciation. Rental demand is high in many areas, providing reliable income streams. In late 2024, cross-border investment in U.S. commercial real estate surged 40% year-over-year, highlighting global confidence in U.S. property【26】.
Diverse Opportunities: The U.S. market spans a range of asset types (from single-family homes to skyscrapers) and regions. Investors can choose high-end luxury condos in New York, cash-flow rental homes in suburban Texas, or anything in between. There are opportunities for both capital growth and yield.
Favorable Investment Environment: Unlike some countries, the U.S. imposes no blanket prohibitions on foreign ownership. There are also structures (like LLCs) and tax treaties that can minimize taxes (discussed later). With the right planning, foreign investors can participate freely and profitably in U.S. real estate.

Understanding Visas and Legal Considerations

No Visa Required to Own Property: Purchasing property in the U.S. does not by itself confer immigration status or the right to live in the country【39】. You do not need to be a U.S. resident or have a special visa just to buy real estate – many foreign buyers purchase while living abroad and simply travel on tourist visas to view or manage properties. That said, if your goal is to spend significant time in the U.S. or relocate permanently, you’ll need to explore visa programs separately from the property purchase.

EB-5 Immigrant Investor Program: One popular option for investors seeking U.S. residency is the EB-5 visa. The EB-5 program grants a Green Card (permanent residence) to foreigners who invest a substantial amount of capital in a new U.S. business that creates at least 10 full-time jobs. Real estate development projects often qualify – for example, investing in a hotel, mixed-use development, or large commercial project via an approved Regional Center can count. The minimum investment required is significant (approximately $800,000 in a high-unemployment or rural area, or $1,050,000 in other areas under current rules【19】), and the process involves documentation and patience. While simply buying a house does not meet EB-5 criteria, participating in a job-creating real estate project can put you and your immediate family on a path to U.S. permanent residency【39】.

E-2 Treaty Investor Visa: Another visa to consider is the E-2 Treaty Investor visa, which allows entrepreneurs from certain treaty countries to live in the U.S. to direct and develop a business they’ve invested in. Buying property for purely passive investment wouldn’t qualify, but if you plan to run a real estate business (such as a property development firm or a rental property management company) and you hold citizenship in an E-2 treaty country, this could be an avenue. The E-2 has no fixed minimum investment, but the investment must be “substantial” relative to the business. Note that E-2 is a non-immigrant visa (temporary, but renewable indefinitely) and requires active management of the enterprise【39】.

Other Legal Considerations: Aside from immigration, ensure you comply with any U.S. laws on foreign ownership in special cases. Generally, there are no nationwide restrictions on foreign buyers. Some U.S. states have started to consider limits on foreign ownership of agricultural land or properties near military bases, but for typical residential and commercial purchases, you’re free to buy. One niche exception: certain co-operative apartment buildings (common in New York City) may decline sales to foreign buyers who won’t be resident – co-ops often require board approval and prefer owner-occupants【3】. If you have your heart set on a co-op unit, be prepared for this possibility. Otherwise, as a foreign investor you can purchase single-family homes, condos, multi-family buildings, offices, hotels, land, etc., without restriction【48】.

Types of U.S. Property Investments Available

Foreign investors can tap into many different segments of the U.S. real estate market. Here are the primary property types and investment channels to consider:

Residential Real Estate: This includes single-family houses, townhouses, condos, and duplex/triplex units. Many foreigners buy residential properties either to use as a vacation home or to rent out for income. Residential properties in desirable locations (city centers, vacation destinations, good school districts) can provide steady appreciation and easier resale. According to one expat tax service, foreigners are allowed to buy all the same residential property types as U.S. citizens, whether for personal use or rental investment【48】.
Commercial Real Estate: Commercial properties include office buildings, retail shopping centers, warehouses, industrial properties, and apartment complexes (multi-family buildings with 5+ units). Commercial real estate typically offers higher income potential (through leases to businesses or multiple tenants) but often requires larger investments and professional management. Many international investors use U.S. commercial real estate to generate stable cash flow in dollars. Just like with residential, there’s no prohibition on foreign ownership of commercial assets【48】. Do note that commercial deals can be more complex (leases, zoning, etc.), so having local expert partners is key.
Hospitality and Specialty: This category covers hotels, motels, and hospitality-oriented properties, as well as niches like student housing, senior living facilities, or parking garages. These can be lucrative if tourism or demographic trends are favorable. For example, a foreign investor might buy a small motel or a portfolio of short-term rental properties in a vacation area. Hospitality assets can qualify for certain visa investments (e.g., developing a hotel might be an EB-5 project) but also typically require active management or hiring a third-party management company.
REITs (Real Estate Investment Trusts): If you prefer a more hands-off approach, you can invest in U.S. real estate through REITs. A REIT is a company that owns income-producing real estate and sells shares to investors. There are publicly traded REITs on the stock exchange that anyone (including foreigners) can buy shares in, as well as private or institutional REITs. Investing in a REIT means you don’t directly own the property – you own a share of the portfolio. REITs can be a way to gain exposure to sectors like large apartments, office towers, or shopping malls with much smaller capital outlay. Keep in mind, foreign investors will pay tax on REIT dividends (usually a flat 30% withholding on U.S. dividends, subject to any tax treaty reductions). REIT investments also won’t help with visas, but they are very liquid and convenient.
Crowdfunding & Online Platforms: In recent years, real estate crowdfunding platforms have emerged that allow individuals to buy fractional shares or lend money to U.S. real estate projects. Websites like Fundrise, RealtyMogul, CrowdStreet and others pool investor funds to purchase properties or finance developments. Some of these platforms accept non-U.S. investors (often requiring you to be an accredited investor and to provide an ITIN for tax reporting). Through crowdfunding, a foreign investor might put as little as $5,000-$10,000 into a diversified fund of U.S. properties or a specific project. As with REITs, you won’t have direct control, but it’s a low-effort way to participate in the market. Always check the platform’s rules for international investors, and understand the fees and liquidity constraints (many such investments have multi-year lockup periods).

Top U.S. Markets for International Investors

The United States is a huge country with varied real estate markets. Where should you consider investing? It depends on your strategy – whether you prioritize capital appreciation, rental yields, or personal use – but historically a few markets consistently attract foreign buyers:

New York City: NYC is often the first city that comes to mind for international investors. As a global financial center with limited land and high demand, New York properties (especially Manhattan condos) are seen as trophy assets. Foreign buyers from all over the world purchase condos and apartments in New York for status, rental income, and long-term gain. Prices are very high, and rental yields tend to be modest, but the city’s real estate has shown strong value resilience. Do note that if you’re considering Manhattan co-op apartments, board rules might make it tough as a foreigner (condos are more foreign-buyer-friendly). Despite recent market fluctuations, NYC remains a prime destination for those looking to invest in iconic property.
Los Angeles: The Los Angeles metro area offers a sprawling, diverse market – from luxury homes in Beverly Hills and Malibu to commercial properties in downtown L.A. and the Silicon Beach tech corridor. LA attracts Asian and Middle Eastern investors in particular, drawn by the entertainment industry, climate, and sizable immigrant communities. Rental demand is strong across Southern California, though cap rates (return on property price) are relatively low in prime areas. Investors often bet on long-term appreciation in LA’s supply-constrained neighborhoods. Additionally, California has high state taxes and more regulation (e.g., rent control in L.A.), so factor that in.
Miami (South Florida): Miami is a hotspot for foreign investment, especially for buyers from Latin America, Europe, and Canada. Florida has no state income tax and a reputation for being business-friendly. In Miami you’ll find everything from oceanfront condos to retail centers and multi-family buildings. The city is an international hub with a vibrant tourism industry, making short-term rentals and hotel investments attractive as well. In the past year, Florida was the #1 state for foreign home buyers, accounting for 20% of all international U.S. home purchases【51】. Miami’s condo market offers a range from affordable units to ultra-luxury penthouses. Just be mindful of condo maintenance fees and the prevalence of cash buyers (which can drive competition). Nearby Fort Lauderdale and West Palm Beach also see substantial foreign investment.
Orlando & Central Florida: Orlando, along with nearby Tampa and other central Florida areas, is popular among foreign investors focused on vacation rentals and affordable homes. Orlando’s draw is its theme parks (Walt Disney World, Universal Studios) and year-round tourism. Many Canadians, Brits, and Latin American investors buy condos or single-family homes in Orlando to use as a vacation home and rent out on Airbnb when they’re away. Prices are lower than coastal Florida, and rental yields for short-term rentals can be quite high in peak season. The Orlando area also has a growing year-round population and diversifying economy, making long-term rentals viable too. If investing here, be aware of local regulations on short-term rentals (some communities zone against them, while others embrace them), and consider hiring a local property manager specializing in vacation rentals.
Texas (Austin, Dallas, Houston): Texas has emerged as a prime destination for international real estate investment due to its strong economic growth and relatively low property costs. Austin, in particular, has gained fame as a tech and innovation hub – its booming job market and population growth have driven up housing demand. Foreign investors are looking at Austin for both residential and commercial opportunities (like investing in new apartment complexes or tech office campuses). Dallas and Houston, as larger metro areas, offer plentiful inventory – from suburban single-family rentals that cash flow, to office and industrial properties tied to Texas’s finance and energy industries. Texas was the #2 state for foreign buyers recently (about 13% of foreign home purchases)【51】. The lack of state income tax and generally landlord-friendly laws are additional perks. The main challenge in Texas is property tax, which can be high, but overall it remains very attractive for investment.
Other Notable Markets: A few other U.S. markets to mention include:
– San Francisco Bay Area: High-tech economy and limited housing supply create sky-high prices (and strong long-term growth) in San Francisco and Silicon Valley. Foreign investors (especially from Asia) continue to purchase properties here, though the barrier to entry is high.
– Seattle: Another tech-driven market with significant Asian investment. Seattle offers a slightly lower price point than California and a growing economy led by companies like Amazon and Microsoft.
– Chicago: The Chicago area has historically seen less foreign investment than coastal cities, but it offers a diverse economy and yields on rental properties are higher due to more moderate prices. Some investors from Europe and Asia target Chicago for its urban center and architecture.
– Boston, Washington D.C.: These East Coast cities have steady real estate markets underpinned by education, government, and healthcare sectors. Foreign buyers here are often looking for stable long-term holds rather than high yields.

Each market has its own dynamics, so it’s crucial to research local trends. Consider factors like job growth, population growth, rental demand, and inventory when selecting a market. Many foreign buyers start with markets they are personally familiar with – for example, a Canadian might choose Florida or Arizona because they’ve vacationed there, or a European might feel comfortable in New York or L.A. due to existing connections. Ultimately, align the location with your investment goals (whether that’s rental income, appreciation, or personal use).

Step-by-Step Buying Process for Foreign Investors

Buying property in the U.S. follows a similar process for foreigners and Americans alike, but as an international buyer you’ll want to take a few extra steps to protect your interests. Below is a step-by-step breakdown:

Define Your Investment Goals and Budget: Start by clarifying what you want to achieve. Are you buying a vacation home for occasional personal use, a rental property for income, or a property to hold for long-term appreciation? Your strategy will influence the type of property and location you choose. Determine your budget and financing plan as well. Decide early if you’ll pay all cash or need a mortgage – many foreign buyers (about 50%) end up paying cash【42】, but loans are available if you qualify. Setting a clear budget range will help narrow your search and avoid wasted time.
Research Markets and Property Types: With your goals in mind, research which U.S. market and property type fits best. Use the information in the previous section as a starting point. For instance, if you want a rental vacation condo, look at tourist-heavy areas like Orlando or Miami. If you want a stable income property, maybe a multi-family in Texas or a single-family home in a growing suburb. Also decide whether you want a turnkey property (already renovated and leased) or you’re willing to do renovations. Having 2-3 target cities will allow you to focus your search. At this stage, also educate yourself on any local regulations that might affect foreign owners or landlords (for example, short-term rental rules, or if the state has any additional property taxes for non-residents – most don’t, but it’s good to check).
Assemble Your Team (Agent, Attorney, Advisers): Buying remotely means you need a trustworthy team on the ground. First, find a real estate agent or broker experienced in working with international buyers. Many agents have the Certified International Property Specialist (CIPS) designation, indicating training in cross-border transactions【48】. A good agent will not only send you listings and arrange virtual or in-person tours, but also guide you on local prices, neighborhoods, and offer process. You will also want a real estate attorney or closing agent (title company) depending on the state, to handle contracts and closing paperwork – in some states like New York an attorney is standard, in others the title/escrow company manages most of closing. Additionally, consider consulting a cross-border tax advisor early to discuss how to structure the purchase (personal name vs LLC, etc.) and an immigration attorney if pursuing a visa. Having a knowledgeable team in place will save you headaches and help avoid costly mistakes.
Find Properties and Begin Your Search: Now for the fun part – property hunting. There are multiple ways to find U.S. real estate listings: public listing sites (like Zillow, Realtor.com), local MLS through your agent, and specialized platforms. Brevitas, for example, is a platform that connects investors to a database of commercial and investment properties across the U.S. You can search for listings by city, price range, asset type, and more, and even set up email alerts for new properties that match your criteria【44】. Take advantage of virtual tours, photos, and data your agent provides. As you identify promising properties, your agent can give you comparable sales and rental comps to evaluate the pricing. If possible, plan a trip to visit your top target properties in person – seeing the neighborhood and property condition yourself (or through a trusted proxy) is invaluable. If travel isn’t feasible, you can hire independent inspectors or even freelance videographers to give you an unbiased look. Shortlist one or two properties that best fit your needs.
Secure Financing (If Needed): If you will require a mortgage or other financing, you should get this process started once you have a general idea of what you’re buying, or at least before making a final offer. Foreigners can get U.S. mortgages, but it typically requires working with a lender that has a “foreign national” loan program. These loans often come with larger down payment requirements (25-40% down is common) and additional documentation since you won’t have a U.S. credit history【35】. Expect to provide proof of income (letters from your employer or accountant), bank reference letters, and identification like your passport and ITIN【35】. Alternatively, some foreign investors refinance or leverage equity in their home country to pay cash in the U.S., then potentially refinance later. If you are going to finance, obtain a pre-approval letter from the lender – this will strengthen your position when you’re ready to make an offer. If you’re paying cash, ensure you have a plan to transfer the funds to the U.S. in a timely manner (and be mindful of currency exchange rates when moving money). Funds for a purchase will usually need to be in a U.S. escrow account by closing, so you might open a U.S. bank account or work through the escrow company for the transfer.
Make an Offer and Negotiation: Once you’ve found the property you want and have your financing lined up, your agent will help you draft a purchase offer. This is typically a written contract (or memorandum of understanding for some commercial deals) that states the price you’re willing to pay and any conditions (contingencies). Common contingencies include the property passing an inspection, you obtaining financing by a certain date, and clear title to the property. Your agent will advise you on a suitable offer based on market conditions – in a hot market you may have to bid at or above asking price; in a cooler market you can negotiate more. Along with the offer, you will usually put down an earnest money deposit (often 1-3% of the purchase price) to show seriousness. This deposit is held in escrow and later applied to the purchase price (or returned to you if contingencies are not met). For foreign buyers, it’s wise to have an attorney review the offer contract, especially to ensure it accounts for any cross-border issues (for example, allowing a bit longer closing timeline if you need time for funds transfer). The seller will either accept, reject, or counter your offer. Negotiations may go back and forth on price, closing date, or terms. Once both parties sign the offer, it becomes a binding Purchase and Sale Agreement.
Due Diligence and Inspection Period: After your offer is accepted and you are “under contract,” there is typically a due diligence period (often 10-15 days for residential, longer for commercial deals) for you to fully verify the property’s condition and legal status. Key steps here include:
– Home Inspection: Hire a professional inspector to thoroughly examine the property (structure, roof, systems, pest, etc.). If you cannot be present, have the inspector send you a detailed report with photos. If the inspection finds major issues, you may negotiate repairs or a price credit with the seller, or in extreme cases, invoke your inspection contingency to cancel the deal.
– Appraisal (if financing): If you are getting a mortgage, the lender will order an appraisal to ensure the property value supports the loan. This is mostly for the bank’s sake, but if the appraisal comes in lower than your purchase price, it could affect your loan approval or give you grounds to renegotiate.
– Title Search: The closing attorney or title company will perform a title search to make sure the seller has clear ownership and there are no liens or claims against the property. They will also arrange title insurance to protect you in case an issue surfaces later.
– Condo/HOA Documents: If buying a condo or a property in a homeowners association, you should review the association’s financial statements, rules, and bylaws to ensure there are no surprises (such as rental restrictions, pending litigation, or big fee increases on the horizon).
During due diligence, line up insurance for the property as well (homeowners or landlord insurance). As a foreign owner, some insurers might ask that you have a local mailing address or local contact; if needed your property manager or agent can be the contact.
Closing the Purchase: Once all contingencies are satisfied and due diligence is complete, you move to closing (also known as settlement or escrow closing). Closing is the process where ownership is formally transferred to you. For foreign buyers, closing can often be done remotely via mail or with a power of attorney, though some choose to be present in person. A few things happen at closing:
- You will sign the final closing documents. This includes the deed, transfer tax declarations, loan documents if any, and various affidavits. If you aren’t in the U.S., documents might be sent to you for signing and you will need them notarized (possibly at a U.S. embassy/consulate or by an international notary) and returned. Some states now allow electronic notarization which can simplify remote closings.
- You pay the remaining balance of the purchase price. The earnest money you paid earlier is credited, and you or your lender will wire the remaining funds to the escrow or title company. Make sure to initiate the wire transfer well ahead of the closing deadline (international transfers can take a few days). Double-check wire instructions verbally with the title company to avoid fraud.
- Once funds are received and documents are signed, the deed is recorded with the local county, and you are officially the owner. You’ll receive keys or access codes to the property (usually via your agent or a third party if you aren’t there in person).
At closing you’ll also pay closing costs – these include title insurance, escrow fees, recording fees, any transfer taxes, and attorney fees. In the U.S., buyers and sellers often split some closing costs, but it varies by location. Your closing agent will provide a detailed statement of all costs beforehand. As a foreign buyer, you might also need to deal with a FIRPTA withholding if you are buying from a foreign seller – more on FIRPTA in the tax section, but essentially if the seller is foreign, the buyer must hold back 15% of the sale for the IRS. Make sure your closing team handles this correctly so you don’t get penalized.
Post-Purchase: Managing Your Property: Congratulations – you now own U.S. real estate! But your work isn’t quite done. If you don’t plan to occupy the property yourself, you’ll need to arrange management and take care of ongoing obligations:
- Property Management: If you are an overseas owner, hiring a professional property manager is often worth every penny. A local manager can handle finding tenants, collecting rent, routine maintenance, and responding to emergencies. They typically charge around 8-10% of monthly rent for long-term rentals (or 20-30% for vacation rentals that involve more turnover and services). Provide your manager with clear instructions and ensure they will send you regular reports. Many foreign investors form an LLC and then give the manager authority to manage that LLC’s property.
- Taxes and Accounting: After closing, ensure you obtain all the documents needed for taxes. You should apply for an ITIN (Individual Taxpayer Identification Number) if you don’t have one, so that you can file U.S. tax returns (an ITIN can be obtained through the IRS, often with the help of your attorney or a Certified Acceptance Agent). Track all your expenses (repairs, management fees, property taxes, insurance) because you will need those for your tax filings to offset rental income. We’ll cover tax obligations in detail in the next section.
- Insurance and Utilities: Make sure the property’s insurance is in force starting from closing day. Also arrange for utility bills (electricity, water, internet, etc.) to be in your name or your property manager’s name going forward. Set up online accounts if possible for easy payments. Many foreigners maintain a U.S. bank account to pay these recurring expenses and receive rental income – this avoids international transfer fees each time.
- Ongoing Oversight: Plan periodic visits if you can, to check on the property and meet your team. If that’s not feasible, schedule regular video calls with your manager or have a friend or relative (if you have any in the area) visit occasionally. Treat your investment professionally – read the monthly/quarterly reports, stay on top of local market news (are rents rising, any new regulations?), and communicate with your tenants or manager to address issues promptly. With the right setup, your U.S. property can be a hands-off investment, but it’s always wise to monitor it.

Financing Options for International Buyers

One of the biggest challenges for foreign investors is obtaining financing in the U.S. Since you might not have credit history or income established stateside, many traditional lenders are hesitant. Nonetheless, you do have options:

Foreign National Mortgage Loans: Several U.S. banks and mortgage companies offer loan programs designed for non-resident foreign buyers. These often require a higher down payment (usually 30% or more) and come with slightly higher interest rates to offset the lender’s risk. Lenders may ask for alternative documentation to evaluate your creditworthiness, such as letters from your foreign bank and employer, proof of overseas assets, and a valid visa or passport【35】. Some globally active banks (HSBC, Citi, etc.) have international mortgage divisions that streamline lending to clients abroad, especially if you open a U.S. bank account with them.
Cash Purchases or Local Financing: A significant number of foreign buyers opt to pay cash for U.S. real estate – NAR reports about 50% of international purchases are all-cash【51】. Cash offers can be advantageous in competitive markets and obviously involve no loan approvals. If you don’t have all the cash on hand, one strategy is to finance in your home country. For example, you could take a home equity loan on property you own back home or secure a personal loan from a foreign bank, then use those funds to buy in the U.S. This way, you deal with lenders in your own country but still achieve effectively leveraged purchase of U.S. real estate. The downside is currency risk – if your home currency moves against the dollar, the cost of your loan payments could rise.
Seller Financing: In some cases, a property seller (especially in commercial deals or with high-end properties) might agree to “carry the paper” for a foreign buyer. This means instead of you getting a bank loan, you’d pay the seller in installments over time with interest, via a promissory note. Seller financing for foreigners is not very common, but it can happen if the seller trusts the buyer and is eager to sell. Always have an attorney review such arrangements. A variation of this is arranging a Joint Venture with a local partner who can obtain financing more easily, though that involves sharing equity.
Mortgage Tips: If you do pursue U.S. financing, keep these tips in mind: (1) Start the process early – it can take longer for foreign loan applications to be processed. (2) Be prepared to document income thoroughly (translated financial statements, pay stubs, tax returns from your country). (3) Expect to maintain a significant cash reserve in a U.S. bank as a condition for some loans. (4) If one lender rejects you, try others – underwriting standards vary. There are mortgage brokers who specialize in foreign national loans who can help package your application to multiple lenders. Finally, consider the currency exchange aspect: you may be paying the mortgage from rental income in USD (ideal scenario) or converting foreign currency each month (in which case, using a service with good FX rates or maintaining a dollar account is wise).

Note: If you plan to finance, you will need to obtain a U.S. Individual Taxpayer Identification Number (ITIN) early on, because lenders and closing agents will require it for reporting interest and property tax payments. The ITIN is also needed for your tax filings. Also keep in mind that U.S. mortgages typically require property insurance – as a foreign owner, ensure you can obtain insurance without issues (most insurers will issue policies to foreign owners, but they might need a U.S. contact address for paperwork).

Ownership Structures and Tax Planning

How you choose to hold title to your U.S. property can have important implications for liability protection, taxes, and estate planning. Foreign investors typically use one of the following ownership structures:

Direct Ownership in Your Name

The simplest option is to buy the property in your own name as an individual. Many foreigners do this, especially for personal-use properties or straightforward rental homes. While simple, this approach has a couple of drawbacks: (1) Personal liability – if someone sues over an incident at the property, your personal assets could be at risk; and (2) Estate tax exposure – U.S. estate tax applies to foreign owners (more on this shortly), meaning if you passed away while holding the property personally, your heirs could face a hefty tax. Nonetheless, direct ownership avoids any costs of maintaining an entity and is easy to set up. If you choose this route, strongly consider getting ample insurance (liability coverage) to mitigate risk.

Limited Liability Company (LLC)

Forming a U.S. Limited Liability Company to own the property is a very popular strategy for overseas investors. An LLC is a legal entity that can hold title to real estate, shielding the individual owner(s) from personal liability beyond the LLC’s assets. For example, a tenant who wants to sue will have to sue the LLC, not you personally. LLCs also provide flexibility in taxation – by default a single-member LLC is “disregarded” for tax (income is reported on your personal return just as if you owned directly), but you still get the liability protection. If there are multiple owners, the LLC can be treated as a partnership. Many foreign investors set up a separate LLC for each property. An LLC can also make estate planning easier – you could pass the LLC shares to heirs without the property going through U.S. probate court【29】. Overall, using an LLC can reduce taxes in some cases and increase deductible expenses (certain costs paid by the LLC might be written off). Do note, an LLC by itself does not avoid U.S. estate tax (if you as a foreign person own the LLC, it’s still considered U.S. property), unless you get more complex and have a foreign entity own the LLC. But for most, the primary benefit is liability protection. Setting up an LLC is relatively quick and inexpensive (few hundred dollars), but be aware of annual state fees (some states like California charge $800/year for LLCs). It’s wise to consult a U.S. attorney to form the LLC properly and ensure it’s compliant. Also check with your lender – if you get a mortgage, some banks initially require the loan in your personal name, then allow transferring to an LLC post-closing (due to foreign national status, some might directly lend to your LLC as well).

Trusts and Other Structures

Some foreign investors use trusts or corporate structures for additional planning benefits. A trust (such as a revocable living trust) can hold the property and specify how it passes to beneficiaries, helping avoid probate and providing privacy. However, a U.S. domiciled trust won’t eliminate estate tax unless structured as a foreign trust, which gets complicated. Another strategy used by ultra-high-net-worth investors is to own U.S. real estate through a foreign corporation or partnership, sometimes layered with a U.S. LLC. For example, a foreign individual might form an offshore holding company which in turn owns a U.S. LLC that holds the property. This can remove the asset from the U.S. estate tax net (because the person owns shares of a foreign company, not U.S. property directly), but it requires careful legal structuring to avoid adverse tax consequences (like branch profits tax on the corporation’s income, or double taxation). These advanced structures are beyond the scope of this guide, but be aware they exist. For most individual investors, an LLC or personal ownership (with good insurance and possibly term life insurance to cover estate tax) will suffice.

Tax Obligations for Foreign Owners

Investing in U.S. real estate will subject you to certain U.S. taxes. It’s critical to understand these and plan accordingly:

Property Taxes: All U.S. properties are subject to annual property taxes levied by the local government (city or county). These are based on the assessed value of the property and vary widely by location (roughly 1% of value per year on average, but it can be 0.5% in some states and over 2% in others). As the owner, you must pay these regardless of your residency. They are usually paid in installments (e.g., twice a year) and can often be paid from an escrow account if you have a mortgage. Property taxes are deductible against rental income for tax purposes.
Rental Income Tax: If you rent out the property, the income is subject to U.S. income tax. The IRS has specific rules for foreign investors receiving U.S. rental income. By default, rental income earned by a non-resident is considered FDAP (Fixed, Determinable, Annual, Periodic) income and is subject to a flat 30% tax on the gross rent, which the tenant or property manager is supposed to withhold. However, this default method is usually unfavorable because it taxes your gross revenue without allowing deductions for expenses. Fortunately, foreign landlords can make an election with the IRS to treat rental income as “effectively connected” with a U.S. trade or business. By filing this election (often done by simply filing a timely U.S. tax return and declaring the net income), you will then be taxed on your net rental income (after deducting all expenses like mortgage interest, property taxes, maintenance, depreciation, etc.) at the regular graduated tax rates. In practice, nearly all foreign investors should use this net taxation approach – it usually results in a much lower tax bill than 30% of gross rents. You will file an annual Form 1040-NR (non-resident tax return) reporting your rental income and expenses. If you have no net profit (or a loss) you may owe no tax, but you still need to file. It’s wise to hire a U.S. accountant to handle these filings. Also, check if your home country has a tax treaty with the U.S.; treaties can sometimes reduce withholding rates or allow credits so you don’t get taxed twice on the same income【48】.
FIRPTA Withholding on Sale: One acronym every foreign property owner should know is FIRPTA – the Foreign Investment in Real Property Tax Act. Under FIRPTA, when a foreign person sells U.S. real estate, the buyer is required to withhold a portion of the sale proceeds (up to 15% of the gross sales price) and remit it to the IRS as an advance payment of the seller’s tax due【27】. This is not an extra tax – it’s like a deposit or withholding to ensure the IRS can collect any capital gains tax owed on the sale. For example, if you sell your U.S. property for $1,000,000, the buyer might have to withhold $150,000 at closing and send it to the IRS. When you later file your U.S. tax return reporting the actual gain, you may get some of that back as a refund if your actual tax liability is less than $150,000. There are a few exceptions and reductions: if the property sells for under $300,000 and the buyer will use it as a personal residence, FIRPTA withholding can be exempted; and if it’s under $1,000,000 with buyer to reside, the withholding is 10%【5】. Planning ahead, you can also apply for a withholding certificate from the IRS before closing to reduce the withheld amount if you can show your expected tax will be lower. In any case, be prepared for FIRPTA when you eventually exit your investment. Work with a tax advisor to comply and to file the necessary returns to reclaim any excess withholding.
Capital Gains Tax: When you sell the property, you will owe U.S. tax on any capital gain (profit) just like a U.S. citizen would. The tax rate depends on how long you owned the property. If you owned for more than one year, you get the favorable long-term capital gains rates (currently 15% for most investors, 20% for high-income, plus a 3.8% Net Investment Income Tax potentially)【5】. If you owned for one year or less, the gain is short-term and taxed as ordinary income (which could be a higher rate). State taxes may also apply on the gain if the state has an income tax (e.g., California would tax the gain up to 13.3%, while Florida or Texas would have 0% state tax). One strategy to defer capital gains tax is the 1031 Exchange, which allows you to reinvest the sale proceeds into another U.S. property and defer the tax. Foreign sellers can use 1031 exchanges, but be mindful that FIRPTA withholding still occurs at sale and needs special handling so it doesn’t become taxable “boot” – you’d want a qualified intermediary well-versed in FIRPTA rules【27】. If you plan to keep U.S. real estate long-term, 1031 exchanges can be a powerful tool to grow your portfolio tax-deferred.
Estate and Gift Taxes: This is an area that catches many foreign investors by surprise. The U.S. imposes an estate tax on the value of U.S.-situated assets owned by a foreign individual at the time of their death. Unlike U.S. citizens who have a multi-million dollar exemption (over $12 million), foreign owners of U.S. assets get an exemption of only $60,000【48】. That means if you as a non-resident alien pass away owning a $1 million U.S. property in your name, the IRS could levy estate tax on $940,000 of it. The top estate tax rate is 40%, which could result in a substantial tax bill that your heirs or estate would have to pay (foreign owners’ estates do not get the same generous exclusion Americans do). This is why estate planning is critical – strategies like holding property through a foreign corporation or certain types of trusts can help remove it from your “U.S. estate” and avoid that tax. It may also be worth looking into life insurance to cover potential estate tax liabilities. Gift tax is the counterpart to estate tax for transfers made during life – if you try to gift the U.S. property to someone, there are gift tax rules (foreigners have a $18,000 annual gift exclusion for U.S. assets). Some tax treaties between the U.S. and other nations provide relief on estate taxes, so check if your country has an estate tax treaty with the U.S. (for example, treaties with Canada, UK, France, Germany, etc., can allow a prorated exemption larger than $60k). Given the complexity, consult an international estate planning attorney for personalized advice. If you hold property via an entity, also consider how that entity will be passed on to your heirs.

Tax compliance may sound daunting, but with proper planning it’s manageable. The key takeaways are: keep good records, hire professionals who understand cross-border issues, and don’t ignore U.S. filing requirements. Many investors also structure ownership via an LLC or company not just for liability, but so that the “entity” remains constant even if individual owners change (useful for estate planning or if selling a stake). By understanding the tax landscape, you can structure your investment to minimize taxes and avoid unpleasant surprises.

Challenges for Foreign Investors (and How to Overcome Them)

International real estate investors face some extra hurdles that domestic buyers might not. Here are the common challenges and ways to address them:

Financing Limitations: As discussed, securing a U.S. mortgage can be tricky without U.S. credit history. Lenders may demand larger down payments and plenty of documentation【35】. Solution: Work with lenders specializing in foreign buyers (shop around internationally-friendly banks). Be financially prepared to put 30% or more down, and gather income statements, bank letters, and other proof of creditworthiness in advance. Alternatively, consider paying cash or tapping financing from your home country to bypass U.S. loan barriers.
Distance and Property Management: Owning property from thousands of miles away means you can’t personally check in on it frequently or deal with tenant issues easily. Solution: Hire a reputable local property management company to handle day-to-day operations. Do thorough research or get referrals for managers, and build a relationship of trust. Leverage technology too – many managers use online portals where you can monitor rent collection and property reports remotely. Schedule at least one visit per year if possible to inspect the property and meet your team. Basically, assemble a dependable local “boots on the ground” team so you can be hands-off.
Navigating Unfamiliar Laws and Taxes: U.S. real estate law, property taxes, and income tax rules can be complex and are likely different from your home country’s system. It’s easy to run afoul of requirements like FIRPTA or miss out on deductions if you’re not aware. Solution: Engage professionals who understand cross-border transactions: a U.S. real estate attorney for the purchase, and a U.S. tax advisor on an ongoing basis. A tax expert can file your returns correctly and help structure your investment to be tax-efficient【48】. Many foreign investors also benefit from advice in their home country to ensure they get credit for U.S. taxes paid and don’t face double taxation.
Currency Exchange Risk: Fluctuating exchange rates can affect your investment. For instance, if your home currency weakens against the U.S. dollar, the property effectively becomes more expensive to you (and rental income when converted back is higher in your currency). Conversely, a strong dollar can mean more costly future investment but more valuable returns. Solution: Plan your currency exchanges strategically. Some investors move a chunk of funds into USD when rates are favorable and keep a U.S. bank account, rather than converting money month-to-month. You might also explore using forward contracts or other hedging tools for large transfers, though that’s generally for more sophisticated investors. Keeping the majority of your investment finances in USD (rents, expenses, etc.) acts as a natural hedge since everything stays in dollars.
Cultural and Business Differences: Real estate practices (negotiation, paperwork, etc.) in the U.S. may differ from your country. You might also face language barriers or simply not being familiar with how things are done locally. Solution: Take time to learn the basics of U.S. real estate transactions (guides like this help, as will your agent). Work with an agent or broker who speaks your language or has experience with clients from your region, if that makes communication easier. Don’t hesitate to ask “stupid” questions – it’s better to fully understand than assume. The NAR (National Association of Realtors) has many members who specialize in international buyers – look for those credentials like CIPS【48】. When touring properties virtually or in person, have someone who knows the local area with you to explain context. Essentially, surround yourself with knowledgeable allies and take it slow until you’re comfortable.

While there are challenges, none are insurmountable. Thousands of foreign nationals successfully buy U.S. real estate each year. By acknowledging these potential difficulties and proactively addressing them, you can mitigate risks. The key is to do thorough due diligence, lean on experts, and make informed decisions. As an international investor, you may actually find you have some advantages – for example, you might be more accustomed to dealing with currency issues or working across jurisdictions, which can serve you well. With preparation, your cross-border real estate investment can be just as smooth as a local one.

Using Brevitas to Find Properties and Connect with Agents

One of the challenges in buying real estate from abroad is finding the right deals and trusted brokers without being on the ground. This is where Brevitas comes in as a valuable resource for international investors. Brevitas is an online marketplace and network for investment real estate that makes it easy to discover opportunities and engage with professionals across the U.S.

Robust Property Search: Brevitas offers a powerful database of commercial and investment property listings. You can refine searches by location (city, state, or region), asset type (multifamily, retail, land, etc.), price range, cap rate, building size, and more to pinpoint properties that meet your criteria. Whether you’re looking for a $500K rental property in Florida or a $50M office building in New York, the platform’s search filters help you screen the options efficiently.
Listing Alerts and Tracking: If you have specific investment criteria, you can set up email alerts on Brevitas. For example, you might save a search for “multi-family buildings in Austin under $2M” – whenever a new listing hits the platform that matches, you’ll get notified. You can also bookmark or “watch” listings of interest to easily track any updates or status changes. This alert system is particularly useful for foreign buyers who want to keep an eye on the market remotely and act quickly when the right deal appears.
Connect with Brokers & Sellers: Brevitas is not just a listing site – it’s a professional network. Each listing is typically posted by a broker or seller, and the platform provides an integrated chat and messaging feature to reach out directly. As an international investor, you can introduce yourself via the platform and ask the listing agent questions instantly, which is often easier than making international calls across time zones. Keeping communication on Brevitas also helps you stay organized – all property conversations can be in one place. Building these relationships is key to success; through Brevitas you can connect with experienced local brokers who understand dealing with foreign buyers and who can guide you through the deal-making process.
Verified Professionals and Partners: The platform allows you to search for real estate professionals (brokers, agents, companies) and view their profiles and listings. This is helpful when you’re trying to find a specialist in a certain market or asset type. Brevitas’s global network includes thousands of agents and brokerages. You might discover an agent in Miami who has sold dozens of hotels or a broker in Los Angeles who speaks your native language. By browsing profiles and reviews, you can expand your team with the right people. Brevitas also partners with other listing platforms and services, meaning many listings are aggregated for a one-stop experience.
Deal Rooms and Secure Document Sharing: For buyers ready to move forward on a property, Brevitas offers tools to streamline the transaction. The platform has a “Deal Room” feature where, once you engage on a listing, you can sign confidentiality agreements, download due diligence documents (financials, rent rolls, etc.), and eventually even submit offers electronically. This is particularly useful if you can’t be physically present – everything from initial property packages to LOIs (Letters of Intent) can be handled digitally in a secure environment.

In short, Brevitas acts as a bridge between international investors and U.S. real estate opportunities. Instead of flying out and driving neighborhoods hoping to find the right property, you can leverage Brevitas to do much of the groundwork from your home base. It brings transparency and efficiency to cross-border real estate deals. As you begin your U.S. property search, consider creating a free Brevitas account and exploring listings in your markets of interest. The platform’s combination of search tools and global networking can significantly cut down the time and effort needed to identify promising investments and the professionals who can help close the deal.

Example: Buying a Florida Rental Condo – A Canadian Investor’s Story

To illustrate how the process comes together, let’s look at a hypothetical case study:

Meet John from Canada. John is an investor from Toronto who wants to buy a rental condo in Florida. He and his family vacation in Orlando regularly, and he’s noticed the booming short-term rental market there. John’s goal is to rent the condo to tourists for most of the year and use it occasionally for his own holidays. After saving up funds, he sets a budget of around $300,000 for this investment.

Choosing the Market and Property: John zeroes in on the Orlando area, near Disney World, given the constant flow of visitors. Through Brevitas, he searches for “Orlando vacation rental properties” and finds several condo units in resort-style communities. One listing catches his eye: a 3-bedroom condo in a resort with a pool and shuttle service to the theme parks, asking $280,000. The listing is posted by an Orlando-based real estate broker who specializes in vacation homes.

Engaging via Brevitas: John messages the broker on the Brevitas platform, introducing himself as a Canadian buyer interested in the unit. The broker responds promptly (having worked with many foreign buyers before). They schedule a video call to go over details. The broker provides a pro forma rental income statement for the condo, showing that similar units rent for about $150/night and have an occupancy rate of ~70% annually – after expenses, the projected net income looks promising.

Assembling the Team: John decides to move forward with this condo. He engages the Orlando broker as his buyer’s agent to represent him. He also retains a Florida real estate attorney (recommended by the broker) to review contracts. For financing, John initially considered a U.S. mortgage, but the broker connects him with a lender who informs him that as a Canadian with no U.S. credit, he’d need 35% down and an interest rate around 7%. John evaluates this and ultimately chooses to tap equity from his home in Canada to pay cash, so he can close faster and avoid high U.S. loan costs. He also applies for an ITIN with the help of his attorney so he can pay U.S. taxes on the rental income later.

Making the Purchase: John’s agent helps him make an offer on the condo for $270,000, and after a little negotiation, the seller accepts at $275,000 with a 30-day closing. John wires a 10% deposit ($27,500) to the Florida escrow account to secure the contract. During the due diligence period, John’s inspector finds only minor issues (a broken dishwasher and some wear on the carpet). The seller agrees to a repair credit. The closing goes smoothly – John didn’t even have to fly to Florida; he signed the deed and closing papers in Toronto in front of a notary and overnighted them to the escrow agent. On closing day, the escrow agent confirmed receipt of John’s remaining funds and released the keys to John’s local property manager.

Post-Closing and Management: Before closing, John had researched property managers and hired one that specializes in short-term rentals in Orlando resorts. The management company now takes over handling bookings, guest communication, and upkeep for a 20% management fee. They assist John in registering to collect the local county “tourist development tax” on rental income (a requirement for short-term rentals) and will remit it on his behalf. John’s U.S. tax advisor will later ensure that his rental income is properly reported with expenses so he’s taxed only on the net profit (and given depreciation on the property, John’s taxable income will be quite low the first few years). John also set up an LLC to own the condo (John is the sole member of “TorontoOrlando Investments LLC”), which the property manager now represents. This LLC will make it simpler if John ever wants to bring on a co-investor or pass the property to his children.

Enjoying the Investment: Within a month of closing, John’s Orlando condo is listed on major short-term rental platforms and receives its first bookings. Over the next year, John sees an occupancy rate of about 65% and earns rental revenue of roughly $40,000. After all expenses (management, HOA fees, property taxes, utilities, and maintenance), his net cash flow is about $15,000 – a solid ~5% yield on his $300K total investment. Plus, he and his family get to stay in their own condo for two weeks during the holidays, saving on hotel bills. Down the line, John knows he’ll have to navigate FIRPTA if he sells, but he plans to hold the property long-term. In the meantime, he’s already eyeing a second investment – using Brevitas, he’s started exploring a small multi-unit in Austin to diversify his U.S. portfolio.

This example demonstrates how a foreign investor can successfully purchase and manage U.S. real estate with proper planning and support. John leveraged technology (Brevitas for finding the deal and communicating), professional help (an experienced broker, attorney, and property manager), and strategic decisions (using a cash-out refinance from home, creating an LLC, etc.) to overcome the distance and complexity. The result is a profitable investment and a personal vacation spot – truly a win-win. Your situation may differ, but with the guidance in this guide, you too can navigate the process and own a piece of American real estate.

Final Thoughts

Buying real estate in the USA as a foreigner may seem complex, but it is entirely achievable with the right knowledge and team in place. The U.S. welcomes foreign investment in property – there are no overarching legal barriers, and countless international investors have built wealth through American real estate. By understanding visa options (and limitations), planning for taxes, choosing the optimal ownership structure, and selecting your market wisely, you set the stage for a successful investment. Always do thorough due diligence and don’t hesitate to seek professional advice when needed. Cross-border transactions have moving parts in both countries, so expert help is invaluable.

Remember that real estate is a long-term endeavor. Be patient through the process of finding and acquiring the right property. Once you’ve purchased, focus on efficient management and staying compliant with laws so that your investment yields the expected rewards. Whether you’re aiming for rental income, a retirement home, or a strategic asset diversification, U.S. real estate can be a fruitful addition to your international portfolio.

We hope this ultimate guide has demystified the process and given you a clear roadmap to follow. With preparation and perseverance, you can confidently move forward and become a foreign owner of U.S. real estate. Good luck on your investing journey – and welcome to the world of U.S. property ownership!