Should I establish an LLC?
International buyers should ask themselves if it suits their interests to buy under the name of a domestic U.S. company, or LLC (Limited Liability Company). Although there are benefits to buying through an LLC, such as tax incentives, certain treaties between foreign countries and the U.S. can detract from those advantages. Foreign buyers should do their research ahead of time, and enlist the help of a tax adviser who specializes in international law. Here’s what you should know about LLCs in the United States: It takes one week or so to form an LLC. The LLC has to be created in the same state as the property to be purchased. The LLC is required by law to file local, state, and federal tax returns. An LLC can include foreign nationals and U.S. residents. At the time of sale, property owners can sell or transfer shares of the LLC to a buyer. A U.S.-based LLC can be owned by a Foreign Corporation for additional benefits. To know if you want to avoid the U.S. estate tax: When a non-U.S.-resident dies, his or her estate will be taxed by the U.S. government at roughly 45%. This can be avoided if the international buyer sets up an LLC that owns the property and a Foreign Corporation to own the LLC. Since the property is owned by the Foreign Corporation, the U.S. cannot tax it upon the death of the owner. This can be a huge tax savings and is not very expensive or time-intensive to implement, especially if you solicit professional help.
Should I work with a professional real estate agent?
It is to your great advantage to work with a U.S.-based, professional real estate agent who has experience, training, and expertise in helping international buyers. A knowledgeable agent or broker will protect your interests and make the property search and purchasing process as rewarding and efficient as possible. Choosing a team of trusted realtors to assist you can be even better. An agent’s detailed knowledge of the local market, network of contacts, exclusive information, sensitivity to your lifestyle needs, and understanding of your goals in purchasing make all the difference.
What do I need to be able to purchase in the U.S.?
IDENTIFICATION: To purchase a home, be ready to prove who you are. You don’t need to be a U.S. citizen, but you do need an Individual Taxpayer Identification Number. This is a number 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 here. You will also need a valid foreign passport, or two or more current photo identifications, such as a driver’s license, in order to verify who you are and your country of origin. Though property ownership isn’t tied to immigration or visa status, there are still rules about how long you can stay in the U.S., so if you’re not a citizen, check out U.S. visa requirements before you purchase.
VERIFICATION DOCUMENTS: International buyers will usually be asked to provide the following documents, so it’s a good idea to get them in order ahead of time: credit references; proper visa or foreign passport copy; verification of rent/mortgage payments; proof of employment; and adequate closing funds.
INSURANCE: Every U.S. lender requires borrowers to purchase homeowners’ insurance to protect the home from any potential damage and natural disasters. Insurance costs vary based on the size of the property and by state. Costs tend to be significantly higher in states prone to natural disasters, such as Florida and Texas.