Foreign residents may be excited to know that it can be a relatively simple process to purchase property in the U.S. While specific regulations of property ownership vary from state to state, there is generally no law forbidding non-citizens from purchasing land in the United States if they wish to do so.
This can be excellent news for foreign residents interested in purchasing property for their family or if they want to build a home. At Santa Cruz Properties, we know that there are plenty of foreigners all across the Rio Grande Valley who may not realize that they are able to purchase land. We want to help these individuals accomplish the American Dream as well.
If you are a non-citizen interested in owning land, then please consider the following information.
Can Foreign Residents Get a Mortgage Loan?
While non-citizens can purchase land and property in the U.S., not all are eligible for loans or mortgages. Approval for said loans and mortgages are restricted by a variety of requirements as per the lender, including:
- Providing documentation of residence (i.e. Permanent Resident Card)
- Temporary resident status and work visa
These forms of identification will allow the lender to determine if the borrower has a viable source of income and legal residency in the country. Additionally, lenders may require borrowers to have resided in the U.S. for 2 years before being able to purchase land, as well as having a good credit history, a stable source of income, and several years worth of tax returns.
Foreign National Loans
There are lenders that specialize in helping non-citizen residents apply for loans to purchase U.S. land. Individuals that are not able to secure a traditional loan may be able to secure property through a Foreign National ITIN Loan.
These types of loans are most often used for investment property and are not recommended for individuals wishing to move away from their country and build a home and life in the United States.
Be Aware of Disputes Over Foreign Residents Land Ownership
Property disputes are legal disputes that involve real property (also known as real estate). Foreign owners should not find difficulty in resolving these types of issues if they are temporary residents with a work visa or permanent residents with a green card.
Foreign owners have many of the same property entitlements and consumer rights as naturalized residents.
Rules that Foreign Land Buyers Should Remember
Here are four things you should consider as a non-U.S. citizen looking to invest in U.S. property:
1. Co-ops are not a viable option.
Corporations that own co-ops try to deter foreign persons from purchasing because they are intended for primary homeowners. The reason for this is that foreign residents may eventually want to leave and rent out the property. This results in transience in the building and co-ops wish to avoid it.
Co-ops also do not sell to foreign residents because of the limited capacity to hold said individuals accountable in court. It is best to seek land or an individual house if you are a foreign resident wishing to make a home in the U.S.
2. File tax returns on an election.
Property owners must submit a tax return at the end of every year. Property owners can take advantage of the tax break as provided by the IRS if one elects to offset some expenses from their income.
You can do this by filing under ‘election.’ A failure to file or report under ‘election’ will result in penalties.
3. Plan ahead to avoid ‘Death Tax’.
As per federal tax law, when an individual in the U.S. dies, they are taxed 46 percent of their estate. This tax is unlike any other that exists in foreign countries such as Mexico, which may mean foreign individuals are unaware of the consequences of not planning for it.
Current law allows for up to a $5 million USD exemption on an estate tax, however, foreign residents are only allowed $60,000 worth of the exemption. One way to avoid the tax is to purchase property under a Foreign Corporation outside the U.S. or as an individual corporation using an LLC to obtain the property.
4. Check for a country tax treaty.
Most tax advice available does not take into account that some countries have a ‘Foreign Treaty’ with the U.S. that allows for different tax treatment. Safety of investment is a possible privilege of a country tax treaty with the U.S.
A foreign tax lawyer can tell you whether your country has this special agreement with the United States.
Most non-citizens can purchase land or property in the United States. With the help of an experienced foreign loan lender, property agents familiar with selling to non-U.S. citizens, and careful consideration of your financial status, you can purchase land in the United States.
If you are a non-U.S. citizen seeking to purchase property in the Rio Grande Valley, there is plenty of opportunity at Santa Cruz Properties through our owner financed programs. We have gorgeous plots of land you’ll love all over Hidalgo and Starr County.