November 1, 2016
By Jaime Rey
There is no denial that the united states of America are the world power base. thus, it attracts a great number of investors from different sectors yearly. but, so many questions are been asked,after all, no one wants to invest on what they have little or no knowledge about.
Research has shown that real estate is a sector that will keep being lucrative for a very long time. as such, investing as a foreigner in a lucrative sector which is located in a world power base is a dream come true for any foreign investor.
yet, questions like, how to go about it has been left unanswered or answered trivially.
Years ago, making up your mind as a foreigner to invest in real estate in the united states of America is the only easy step from
The difficulties the process will present. but presently, it could be a smooth sail from making the decision to the stage of acquisition. fortunately, the problem of not having enough money can be sorted out by some good commercial banks, financial organisations and lenders for any qualified foreign investor.
1. To be qualified for assistance by any financial institution, it is required that you are either self-employed or have a job in your home country.
2. As a foreigner, it is not a compulsory requirement to have a credit record in the united states of America. although, most lenders may demand an international credit report as a requisite.
3. It is also a matter of necessity to open an account in the united states of America with the lending bank. and many banks demand a deposit of $100,000 or more in the account opened with them.
4. There will be need to disclose your identity this is a very important requirement for foreigners to be considered for financing. as a foreigner, your identity is usually verified through verifying assets, income and copy of international passport.
5. They are also required to sign loan documents which are approved by the lender and escrow company.
6. The loan provided by the financial institution, is 50 - 60% of the purchase price. and the investor is required to have also sorted a down payment of at least 40 - 50 % of the purchase price.
however, this financing does not go for free. the interest rate is slightly considerable for foreign investors and starts at 5% to 12%.
In the United States, there three separate taxes; the estate tax, the income tax and the gift tax.
The estate tax this is a kind of tax in which when a foreign investor dies. the first $60,000 of value is excluded. after which, this type of tax can be as high as 45% of the value of the real estate.
The income tax:this tax starts at 15% to 35% for both corporations and individuals. it is applied on annual net income.
The gift tax depending on the value of the gift,this type of tax can be high as the estate tax.
As a foreigner investing in real estate in the united states of America, it is advisable to consider making good findings of taxes from local tax expert from their country or the United state of America. fortunately, the United States have tax treaties with about seventy foreign countries which make the US tax policy attractive to foreign investors. this treaty helps a foreign investor to be charged according to their country's tax policy.
It is important to note that investors that pay 40% - 50% down payment are exempted from paying income taxes derived from the property for 10 - 15 years. property taxes accumulated annually includes monthly mortgage payments, this is ensured by the bank.
Actually, property taxes in the united states varies from one state to the other. from 0.251% in Hawaii county to 2.076% in Bergen county.
On closing a land or property transaction, your presence might be very necessary but not compulsory. though, considering personal schedules or the cost of travelling to and fro the united states, there might need to sign what is called power of attorney to a real estate agent to complete deals and make necessary signings in your absence. the power of attorney is a legal document that enables an individual to sign on your behalf.
This is a visa program for investors. it is issued to real estate investors, those willing to retire in America and people willing to purchase a franchise or a small business in the united states of America.
As a foreign investor in the united states, there are benefits attached to it.
The united states provide what is called an E2 visa, also known as the investors/business visa.
1. Up to 10,000 of it are issued every fiscal year.
2. To be eligible for this special visa, a foreign investor must invest at least $500,000 to $1,000,000 in a rural area, thus, creating employment in the targeted area.
though there are considerations for investors who have investment capital and reserves worth $100,000 to $200,000 and the investment should be able to employ at least three persons.
3. It includes the investor's family, that is, the spouse and children under the age of 21. though, the children will lose the visa status once they turn 21.
4. This visa enables the family and the investor to study in the states.
5. Investors are not compelled to live in the united states for any amount of time before this special visa is earned.
6.It is issued in 5-year increments.
7. Not all countries maintain treaties of navigation and commerce for E2 visa purpose with the united states.
8. They are not substitutes for green cards.
9. It can be renewed indefinitely as long as the business is still running and is generating enough revenues.
This special visa eases investors the stress of having to apply for visa everytime they need to check their business in the united states.
Foreign investors may not need to always travel to the united states to close deals, look for a good bank to finance their investments. though, not compulsory, but it is advisable to hire a professional real estate agent, who will make the purchasing process an easy one. a real estate agent provides professional advice, and with the power of attorney, they can close deals.
Foreign investors are issued an identification number which is used by the internal revenue service(IRS). TIN(taxpayer identification numbers) is used for the administration of tax laws.
To be eligible for this, you must submit evidence of identity, United states lawful alien status and age. and you will be needed to complete an application for a social security card.
It is used by business entities, trust and estates. it is also known as federal tax identification number.
Individual taxpayer identification number. this is acquired by completing a W-7 form with IRS. it is issued to foreign investors who cannot acquire a social security number(SSN).
A foreign investor preparing to pay tax must apply for preparer taxpayer identification number.
Considering the requirements for the foreign investor to be eligible to buy a property, if a social security number is not issued before closing a deal, properties can still be bought by obtaining an individual taxpayer identification number. but all requirements must be met to qualify to be eligible as an investor in the united states of America.
Every work deserves a pay the benefits of having a real estate professional cannot be exaggerated.
As such, foreign investors pay the real estate agent between 5 to 6% of the sales price after the deal for the property has been close.
The United States of America is undeniably a top destination for real estate investments. Considering that, over the years, for close to a decade now, the real estate sector has been able to grow geometrically in billions of dollars.
Maybe years ago, it was difficult to buy a property but the united states of America have worked out possibilities of having it with ease.
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