FREE DOWNLOAD: 10 Costly Mistakes Foreigners Make Buying U.S. Real Estate

Hi… Welcome to my 2025 guide to buying property in the USA as a Foreigner 👋

My name is David Garner, and I’ve closed on over 100+ rental properties in the United Sates for my own portfolio as an overseas-based Non-U.S. Citizen since 2016.

Real estate in the U.S. can be very financially rewarding, but the process is definitely a little bit different if you’re a Foreigner investing from overseas.

There are specific challenges and risks for Foreigners which you’ll need to navigate. Some of the mistakes I see other Foreign investors make are:

💥 Incorrect investment structure
💥 Buying in the wrong location
💥 Buying problem properties
💥 Failing mortgage approval
💥 Failing to do due diligence
💥 Failing to close
💥 Poor property management
💥 Paying too much tax

By the end of this guide, you’ll have a much better idea of how to;

✅ Set up your investment correctly
✅ Research U.S. real estate markets
✅ Avoid ‘problem properties’
✅ Get a U.S. mortgage
✅ Do your due diligence
✅ Close on your property remotely
✅ Manage your property remotely
✅ Minimize U.S. taxes!

If you’re a Foreigner looking to invest in real estate in the USA safely, remotely, and properly protect your investment, this is for you!

Table of Contents

In general, there are no federal laws in the U.S. that prohibit foreign ownership of residential or commercial real estate.

However, some state or federal restrictions definitely DO apply in the case of:

⚠️ Areas near military installations
⚠️ Agricultural and forest land
⚠️ Public lands

The specifics vary from state to state, and usually are not a concern for Foreigners buying residential property, but it’s wise to do your research.

In 2023, Florida introduced legislation (SB 264) banning Foreign persons from some specific countries from buying property located within 10 miles of critical infrastructure facilities.

This includes buyers from: China, Russia, Cuba, Iran, North Korea, Syria, and Venezuela.

Apart from the restrictions mentioned above, you’re not limited in the types of properties you can purchase in the U.S.

Whether you’re looking for a personal vacation home or an income-producing rental property (like me), the U.S. real estate market offers a wide range of options…

As a Foreign buyer, you can freely purchase the following types of residential real estate in the Unites States:

🏠 Single-family homes
🏢 Condos
🏘️ Townhouses
🏢 Small multifamily (1 to 4 units)

My own portfolio is made up exclusively of single-family homes and small multifamily properties.

Pro Tip: Small multi-family properties generate higher yields, spread vacancy risk, and also qualify for residential financing – even if you’re buying as a non-U.S Resident.

One thing to note about commercial property in the Unites States is that residential apartment buildings are considered commercial properties (Multifamily).

For clarity, buildings with 1 to 4 apartments are classed as residential, while buildings with 5+ residential units are considered commercial.

Here’s a quick shortlist of the types of commercial property you can buy as a Non-U.S. Citizen:

🏢 Multifamily (5+ units)
🏢 Office buildings
🏪 Retail properties
🏗️ Industrial and warehouse properties

While commercial properties can offer higher returns, they typically come with more complexity (zoning, management, financing, etc.).

In my opinion, these types of assets are best suited for more experienced investors, or investors already located in the U.S.

Choosing the right property depends on your goals.

For Foreigners like us who are building rental property portfolios in the USA, your best options are:

🏡 Single-family homes
🏢 Small multifamily
🏘️ Townhouses

These can all be suitable for both long-term rental property investments, and short-term rentals like Airbnb/VRBO.

I typically avoid condos because of the potential for high HOA fees and a lack of control on how those funds are used, difficulty with financing, and long-term maintenance costs for the building.

Speak To An Expert: Book a Free 1-2-1 Strategy Call With me or a Member of my Team and Start Exploring Your Next Investment in the U.S. Real Estate Market

The purchase process for buying a house in the USA is a little different for Foreigners.

For U.S. Citizens who are buying a home, the process typically starts with ‘finances first’. For Foreigners, we start at a different stage.

Let’s compare…

🛒 Typical Purchase Process for U.S. Citizens

🔍 Pre-Purchase Stage
Get your finances in order
Improve credit score
Reduce other debt
Don’t take out new credit
Get pre-approval from a mortgage lender

🏠 Shopping Stage
Shop for Real Estate
Speak to Realtors
Search the market
Attend viewings

🏦 Offer Stage
Make an offer
Sign a purchase contract
Appoint an Attorney
Pay an Earnest Money Deposit

🔍 Due Diligence & Underwriting Stage
Get a home inspection
Get an appraisal
Get a title report
Get a home insurance policy
Lender finishes underwriting
Get a title insurance policy

🤝 Closing Stage
Review settlement statement
Sign paperwork at closing meeting

When we are buying property in the U.S. from overseas, especially if we are buying for investment purposes, the process is a little different because…

🌍 We are not present in the country
🏘️ We may be interested in a wide variety of markets in different states or cities
🏦 We use a different type of financing product

So the purchase process for Foreigners buying property in the U.S. looks more like this:

🛒 U.S. Property Purchase Process for Foreigners

🔍 Pre-Purchase Stage
Set investment criteria
Property market research and analysis
Set up U.S. investment structure

🏠 Shopping Stage
Search for properties
Specific property analysis
Mortgage Pre-Approval (DSCR Loan)

🏦 Offer Stage
Make an offer
Sign a purchase contract
Appoint an Attorney
Pay an Earnest Money Deposit

🔍 Due Diligence & Underwriting Stage
Get a home inspection
Get an appraisal
Get a title report
Get a home insurance policy
Lender finishes underwriting
Get a title insurance policy

🤝 Closing Stage
Review settlement statement
Sign paperwork remotely

The whole process can be as quick as 5 days , and as long as 60 days or more depending on a number of factors, including:

❌ The sellers timetable
❌ Your mortgage lender’s timeframe
❌ Home inspections and appraisals
❌ Title issues

It’s also important to understand the sometimes deals can fail to close for a number of reasons:

🚫 The seller might pull out
🚫 Issues with the home inspection
🚫 Issues with the appraisal (valuation)
🚫 Issues with title

It’s important to appoint your own attorney and/or title company to represent you throughout the process.

So let’s got though this process step-by-step…

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As a Foreign property buyer, one of the very first things you’ll need to consider is setting up an appropriate investment structure to purchase U.S. real estate. This will ensure you protect your personal liability

With the wrong structure, you might become personally liable if someone sues you (like a tenant for example).

💼 Setting up a U.S. LLC as a Non-Resident Foreigner

In most cases, the best thing to do is set up a U.S. LLC (limited liability company) to own the property.

While it can be very quick and simple to set up an LLC online, there are some important considerations for Non-U.S. citizens, including:

⚖️ Jurisdiction – the state in which you register your LLC
🧑‍🤝‍🧑 Structure – single member vs multi-member LLC
👔 Management – member-managed vs manager managed
📍 Address – for receiving post and setting up a U.S. bank account
📝 Paperwork – your operating agreement
🗂️ Registrations & Filings – state and Federal registrations/filing requirements

Key Points to Consider

Different jurisdictions offer different benefits, including the costs of establishing and operating your LLC, state taxes, and anonymity.

Different types of LLC, how they are managed, and the content of your operating agreement might have implications for your personal liability.

There are also other considerations like estate tax planning that might influence the type of structure that is most appropriate for you.

Here’s the exact process for setting up your U.S. LLC as a Foreigner:

📌 Where to Register Your LLC as a Foreigner

The best two choices for Foreigners setting up a U.S. LLC for the purposes of buying real estate are:

📌 Wyoming
📌 The state the property is located

Wyoming offers excellent privacy, no state taxes, and low fees for registration and annual filing.

However, in my experience the simplest solution is often the best. With that in mind, I register my LLCs in the state the property is located.

✅ Choosing a Name for Your LLC

When you are choosing a name for your U.S. LLC, avoid financial words or anything with an ‘adult’ theme. Those kinds of names might make it difficult to open a U.S. bank account.

In most states, you will have to include either ‘LLC’ or ‘Limited Liability Corporation’ at the end of the name.

💼 Best Type of LLC for Foreigners

There are essentially 3 main LLC options:

🧑‍💼 Single Member LLC
🧑‍💼🧑‍💼 Multi Member LLC
🧑‍💼🧑‍💼🧑‍💼 Series LLC

The type of structure you choose should be dictated by your own situation. In most cases, a simple single member LLC is fine. If you are looking to buy lots of properties in one state, then a series LLC is worth considering.

You should also decide how your LLC will be managed. Your options are:

🧑‍💼 Member Managed
🧑‍💼 Manager Managed

This means you can elect for the Members (that’s you) to be responsible for the management of your LLC, or you can appoint a third party manager. The third party manager could be a second LLC you set up exclusively for the purposes of management.

In my experience, a simple member managed LLC is fine in most cases.

🧑‍💼 Appointing a Registered Agent

Every state requires you to appoint a registered agent located in the state with a physical mailing address.

You can find registered agents in your state with a simple google search.

📫 Getting an Address for Your LLC

Having a good postal address for your LLC is more important than you might think.

Using a standard virtual address might make it difficult to open a U.S. bank account. You should use an address service that provides a real physical mailing address.

📑 Registering Your Articles

Once you have a name, address, and have decided on a jurisdiction and management structure, you can file your Articles of Association with the state.

You can usually do this online at the Secretary of State website by completing a simple form.

You will also have to pay the filing fee, which is usually between $100 and $200.

📝 Drafting an Operating Agreement

IF you are going to spend money on any part of this process, this is where you do it.

Template operating agreements provided by online formation companies tend to be pretty basic. This could leave you exposed to liability issues later on down the line.

I highly recommend you hire an attorney to draft your operating agreement. Spending a few hundred bucks here could save you many thousands of dollars and huge headaches later!

🔢 Getting your EIN and ITIN

You will need to apply for an EIN (Employer Identification Number) for your LLC, and and ITIN number for yourself.

An EIN is a unique tax identifier number issued by the IRS for corporate entities such as an LLC, and you will need it to do pretty much anything with your LLC, including:

🏦 Opening a U.S. bank account
🏠 Purchasing a property
💵 Getting a mortgage
📂 Filing your U.S. tax return

An ITIN (International Tax Identifier Number) is the Foreigners equivalent to a U.S. social security number. You’ll need this when you file your U.S. tax return.

You can apply for both your EIN and ITIN directly from the

IRS, or you can have a local registered agent or attorney do it for you.

Summary

There are some very important decisions to make when it comes to setting up your investment structure, but many Foreign buyers rush this step.

Some Key Considerations

🗽 What U.S. state you want to buy in
🏘️ How many properties you want to buy
🏦 Whether you need a mortgage
📝 Your estate tax planning
👨‍👩‍👧 Whether your buying solo or jointly

What is appropriate for you might not be right for the next person, so it’s important to take on professional advice to make sure you set yourself up for success, and don’t end up with problems later on down the line.

You can work with someone like me who has their own team of specialist advisors, or you can appoint your own Attorney, CPA, and/or Tax Strategist.

Get Help Today: Book a Free 1-2-1 Strategy Call With me or a Member of my Team and Start Exploring Your Next Investment in the U.S. Real Estate Market

Once you’ve got your investment structure set up (or at least planned out), you can start looking for the best US real estate markets to invest in.

If you’re buying property in the U.S. for the purposes of investment, you want to make sure you choose a local market that’s going to deliver enough cashflow and capital appreciation, without being a headache!

Making the wrong choice here can prove costly!

Fortunately, there are some fantastic tools available to help you analyse real estate markets at a hyper-local level. I use a market-leading data analytics platform to research the market at the neighbourhood and regional level.

This is the exact criteria I use:

State and County Level

✅ Landlord friendly regulations
✅ Property taxes
✅ Jobs market

Neighbourhood Level

✅ Stable or growing population
✅ Cost of living
✅ Jobs and income growth
✅ Demand from renters and buyers
✅ Low vacancy rates
✅ High rental yields
✅ Housing affordability
✅ Competitive house prices
✅ Steady capital appreciation
✅ Rental price growth

Note that most of my criteria is set at the neighbourhood level. That’s important!

Housing market and other data at a national and/or regional level have almost zero relevance at the neighbourhood level.

Real estate is local! So, I’m mostly concerned with what’s happening within a couple of streets to a couple of miles away from the property I’m interested in.

Pro Tip: If you can’t walk the street, let the data walk it for you. But don’t rely on often-inaccurate data from the likes of Zillow, or outdated Census data

Once you’ve narrowed down your search to a couple of good regional and local markets that meet your criteria, you can start searching for investment properties.

📦 Setting Your Buy Box

My biggest piece of advice here is to figure out ahead of time the type of property that will best align with your goals and investment objectives. That will help you to quickly narrow down your search.

For me personally, my goal is to double my money every 5 years or so, and build up a reliable stream of semi-passive income.

In order to do that I need:

📈 5% annual house price growth
📈 3% to 5% rent price growth
🏦 Finance for 70% with a mortgage

So my buying criteria looks like this:

🏠 Property Type – Single-family and small multifamily.
💰 Pricing – Over $100,000 (for financing)
🛠️ Condition – I only buy properties that require zero or minimal physical renovation
💵 Cashflow – Sufficient rent to cover operating costs and debt service

Some of the properties I generally avoid are:

⛔ ‘Fixer-uppers’ or big renovation projects.

⛔ Super-cheap property – you’re buying a burden, not a bargain – trust me!

I’ve done this before, and it is very difficult to have any meaningful oversight or quality control for renovation projects as a long-distance investor.

🔍 Finding Investment Property Deals

I’ve been buying property in the U.S. since 2016, so I have a well-established network of realtors, house-flippers, wholesalers, and investment property providers that are always looking out for good deals for me and my clients.

If you don’t have that kind of network, the best options for Foreigner property buyers are:

✅ Online portals (Zillow etc)
✅ Local Realtors
✅ Turnkey rental providers

The reality is that searching through websites like Zillow looking for deals can feel like searching for a needle in a haystack.

It takes a lot of work to identify potential properties, and it can also be challenging to find local realtors that understand the needs of a Foreign property buyer.

In my experience, overseas investors are better off dealing with real estate investment companies that sell investment properties.

View Properties For Sale: Visit our Online Portal to Search Pre-Approved Investment Properties Tailored for Non-U.S. Residents

Much like finding a good local market, finding a good investment property really comes down to accurately analysing the data.

Generally speaking, you’re looking to accurately establish:

💰 Price/Value
🏠 Condition
💸 Cashflow

Personally, I use professional deal analysis software that is pre-loaded with my investment criteria to establish market value and analyse the purchase and cashflow over a 30-year period.

That said, you can figure it out yourself using just an excel spreadsheet provided you have accurate data to input.

Here is the criteria I use:

💸 Income
Gross Rental Income
Other Income (pet rent, utilities etc.)

🏦 Reserves
Vacancy (5% to 10% of rental income)
Maintenance (5% to 10% of rental income)
Capital Expenditure (5% to 10% of rental income)

💰 Operating Costs
Insurance
Property Management
Ancillary Management Fees (bill payments etc.)
HOA Fees
Utilities
Landscaping
Accounting & Legal Fees

🔎 Assumptions
3% to 5% annual increase in rental income
3% annual increase in operating costs
3% to 5% capital appreciation

It’s vital to include all your operating costs accurately, and make sufficient allocations to reserve funds. I often see investors fail to allocate adequate reserves for vacancy and capital expenditures.

Making a mistake here can turn a profit-maker into a monthly loss-maker very quickly!

See Case Studies: See Investor Case Studies From Other Foreign Property Investors Including a Comprehensive Financial Analysis

One of the best things about buying property in the United States is the availability of financing for Non-U.S. Residents.

In fact, I use mortgages to purchase all of my investment properties, which allows me to:

✅ Buy more properties (3 houses vs 1)
✅ Benefit from more capital growth
✅ Generate more rental income
✅ Benefit from mortgage paydown
✅ Spread my risk
✅ Benefit from annually increasing net positive cashflow

🏦 Types Mortgages for Foreigners

Broadly speaking, there are two types of mortgage loan products available for Non-Resident Foreigners buying real estate in the USA:

Full Documentation Non-Resident Loan

Full documentation mortgage loans suit Foreign Property Buyers who can provide comprehensive financial records. Depending on the specific lender, that might include:

✅ Credit checks from your own country
✅ Tax returns
✅ Proof of income
✅ Proof of assets

Full documentation loans tend to have more attractive terms and interest rates than the alternative, DSCR loans…

DSCR Loans (Debt Service Coverage Ratio)

This is the mortgage product I use for my rental properties in the U.S.

DSCR loans are more suitable for property investors because the lender focuses on the property’s rental income rather than the borrower’s personal income.

The lender will look for a DSCR of 1 to 1.25 or more.

That means the property must produce enough net operating income (gross rent minus operating costs) to cover 100% to 125% the loan repayment.

Loan applications and terms are much more flexible for DSCR loans:

✅ No credit check
✅ No proof of income
✅ No social security number
✅ Loan to value up to 75%
✅ Fixed interest rates for up to 30 years

It’s important to work with a mortgage broker or lender who understands the needs of a Foreign Buyer. That includes being able to sign paperwork and close remotely!

Once you have your pre-approval for the property you want to purchase, it’s time to do your final due diligence…

Get Pre-Approved: Book Your Free 1-2-1 Strategy Call With me or a Member of my Team and get Pre-Approved for Your U.S. Mortgage Today!

During the closing process, you’ll need to carry out some final due diligence to make sure you don’t overpay for the property, or end up buying yourself an expensive problem.

This should include;

🔎 Independent Home Inspection – Hire a licenced home inspector to visit the property and identify any potential faults or damage. I recommend including a roof inspection and sewer scope as well.

💵 Independent Appraisal – If you’re using a mortgage, your lender will do this. If you’re paying in all-cash, make sure you hire an independent licensed appraiser to value the property.

📝 Title Report – Get a title report to identify any liens, mortgages, unpaid property taxes or other title defects. Your attorney or title company should do this for you.

📋Title Insurance – Make sure you get a title insurance policy to cover any potential losses, claims, or liabilities related to the title issues that might get missed during closing and show up later.

Very often I see overseas investors buying real estate in the U.S. without a home inspection and appraisal. This is a huge mistake!

While it may cost you a few hundred dollars upfront, doing your due diligence properly could save you tens or even hundreds of thousands of dollars later on down the line!

By far one of the biggest stumbling blocks I come across is conducting a closing when you’re not present. And bear in mind, as a foreigner, you’ll pay a bit more in closing costs than a domestic buyer.

I’ve been through this process many times, and I have it down to a fine art. But for new investors it can be quite complicated intimidating, and one small mistake can lead to a failed closing and a whole lot of work for nothing.

🧑‍💼 Real Estate Closing Stakeholders and Paperwork

Every real estate closing has multiple stakeholders, including some or all of the following:

🧑‍💼 Buyer
🧑‍💼 Seller
🧑‍💼 Realtor(s)
🧑‍💼 Attorney(s)
🧑‍💼 Title Company
🧑‍💼 Mortgage Lender
🧑‍💼 Notary
🧑‍💼 Apostille

There are various documents that must be signed on the day, and many of these signatures must be done in front of a U.S. Notary, including:

📑 Deed of Conveyance
📋 Mortgage Deed
📝 Other Mortgage Paperwork

The requirement for a U.S. Notary can be a problem for long-distance investors, especially those of us living in another country.

Fortunately, there are solutions…

🌍 Closing on U.S. Real Estate Remotely

For a buyer to sign out of the country, the process is usually dictated by their mortgage lenders requirements.

In some cases, you may be allowed to sign via a RON remote online notary.

If your country is part of the Hague Convention, you may also be allowed to sign with a person that is allowed by law to take an acknowledgement. An Attorney is usually preferable but some countries may not allow their attorneys to take acknowledgments.

The notary must complete the entire document including the acknowledgment as well as getting an apostille stamp.

The apostille must accompany the mortgage and any other document that is being acknowledged and notarized.

In some cases, I have seen title companies require the investor go to a U.S. embassy.

As you can see, there are some hoops to jump through. Unfortunately, most title companies are not well-versed in dealing with overseas buyers. So, I strongly advise working with someone who understands the process and can coordinate for you.

Book A Call: Book a Free 1-2-1 Strategy Call With me or a Member of my Team and we can Talk you Through the Process Step-by-step

Good property management will make a huge difference to the monthly and long-term profitability of your real estate investment.

Over the years I have worked with a lot of property managers, and I have found that many provide a pretty

poor service.

Here are some things to look out for:

🚨 High ancillary fees (call outs, bill payments, door postings etc)
🚨 Poor tenant vetting
🚨 Poor owner communication
🚨 Poor tenant communication
🚨 Expensive repairs
🚨 Poor quality repairs
🚨 Poor procedures (delinquencies/evictions)
🚨 Poor/incomplete reporting

⚠️ This can have a serious impact on your cashflow, vacancy rate, capital expenditures, tax filing, or worse…

Funny story… I once had an arrest warrant issued for me because a property manager had failed to report/rectify a city code violation caused by a tenant!

🧑‍💼 Hiring a U.S. Property Manager

Here are some things to look into when you’re hiring a property manager:

✅ A detailed fee schedule
✅ High-quality tenant vetting
✅ Experience with out-of-state owners
✅ Regular/complete monthly reporting
✅ Written procedures for delinquencies
✅ In-house contractors
✅ Quality control for repairs
✅ Regular home inspections
✅ Good references from other owners
✅ Fast turnovers
✅ Good property marketing

While placing tenants, handling repairs, and collecting rent is the job of the property manager, as the owner you are responsible for managing the manager.

Here is what I do for my own properties and for my overseas investor clients:

🔎 Review monthly statements
📒 Reconcile rents
🏃 Chase down delinquencies
🔎 Monitor eviction procedures
📒 Audit monthly expenses
💰 Ensure accurate bookkeeping

It’s vital to keep accurate records to ensure you can file your U.S. taxes efficiently, so monitoring and auditing the monthly reporting from your property manager

Get Started: Book a Free 1-2-1 Strategy Call With me or a Member of my Team and Start Exploring Your U.S. Real Estate Investment Today

If you buy property in the U.S. as a Foreigner, you will have to file a U.S. tax return and pay U.S. taxes.

The full scope of US tax implications for foreign property investors is too broad for the purposes of this article, but I can definitely give you some important pointers that will save you a ton of money in U.S. taxes.

Here are the different U.S. taxes you need to be aware of as a Foreign owner of property in the United States:

💰 Property Taxes
💰 Income Tax
💰 Capital Gains Tax
💰 FIRPTA Tax
💰 Estate Taxes
💰Gift Tax

🏠 U.S. Property Taxes

You will need to pay property taxes annually, although you can pay monthly or quarterly in some cases.

Property taxes are be split between County, City and School District, depending on the location of your property. So if you are paying the property taxes yourself, make sure you are aware of the due dates and where you need to send the different payments.

If you have a mortgage, you will usually make pro-rated monthly payments to an escrow account setup with your mortgage lender who will pay the taxes on your behalf.

⚠️ If you don’t pay your property taxes, your property could be forcibly sold to repay the debt and you could lose the property!

💵 U.S. Income Tax for Foreign Owned Real Estate

Non-Residents real estate owners have to file an annual tax return with the IRS (Form 1040-NR) reporting all of your U.S. sourced income.

The default U.S. income tax rate for Foreigners is 30% of your GROSS income (FDAP rate).

However, you can use a special election under section 871(d) of the IRS code to have your income taxed as ‘effectively connected to a U.S. trade or business’ (ECI election).

This means you will be able to make deductions of all your costs and depreciation, and your NET income will be taxed at the standard graduated rates (10% to 37% in 2024).

In my experience, making these deductions will reduce your taxable income to zero or close to zero.

Here are some of the deductions you can make:

💰 Purchase costs
💰 Property taxes
💰 Property management
💰 Repairs
💰 Mortgage interest
💰 Depreciation
💰 Legal and accounting costs
💰 LLC formation and filing fees
💰 Banking fees

To make this election, you will need to attach a statement to your tax return containing specific details about your income and the property.

You will also need to provide form W8-ECI to any withholding agents such as real estate agents or property managers to ensure they do not withhold 30% of your gross income.

Speak To An Expert: Book a Free 1-2-1 Strategy Call With me or a Member of my Team and we will be Happy to Help you set up Your tax Mitigation Strategy

📈 FIRTPA Withholding Tax Foreign Owned Real Estate

The Foreign Investment in Real Property Tax Act (FIRPTA) was introduced to ensure Non-U.S. Residents pay their fair share of capital gains tax when they sell a property in the United States.

The FIRPTA withholding tax rate is 15% of the gross sale proceeds. The buyer or Broker handling the sale acts as withholding agent.

The Non-U.S. Resident seller must then file a U.S. tax return, and will usually be refunded the difference between the FIRPTA withholding tax and the actual amount of capital gains tax that is due.

There are numerous exemptions from FIRPTA, including where the sale price is less than $300,000 and the buyer intend to live in the property for at least 50% of the time for the next 2 years.

You can also apply for a Withholding Certificate from the IRS to reduce or eliminate FIRPTA withholding tax if the amount that must be withheld would be more than your maximum capital gains liability (see below).

📈 Capital Gains Tax for Foreign Owned Real Estate

Non-U.S. Citizens and Foreign Investors are liable for capital gains tax when you sell a property located in the United States.

As with U.S. income taxes, the ECI tax election applies to capital gains tax.

The ECI election allows you to claim deductions and credits, reducing your capital gains tax liability, and apply for a Withholding Certificate to reduce or eliminate FIRPTA withholding tax.

⚰️ U.S. Estate Taxes for Foreigners

Something to consider is what happens to your U.S. real estate holdings when you die.

In the United States, estate taxes are calculated based on the gross value of your assets at a rate of 40%.

For U.S. Citizens, there is an exemption of $13 million, but for Non-Resident Foreigners the exemption is just $60,000.

So your estate could be taxed at 40% for the whole value of your assets over $60,000.

There are various tax planning tools and mitigation strategies to minimize estate taxes, including the use of foreign corporations to hold your assets.

Estate taxes are complicated, and the good advice is highly subjective and based on your own unique circumstance and objectives.

I strongly suggest speaking to a qualified CPA or tax strategist with experience of working with Non-Residents.

Speak To An Expert: Book a Free 1-2-1 Strategy Call With me or a Member of my Team and we will be Happy to Help you set up Your Tax Mitigation Strategy

I hope you found this guide useful!

During the course of my own 10-year journey in the U.S. real estate market I’ve enjoyed some great success, but I have definitely also:

⚠️ Bought the wrong kind of property
🌎 Bought property in the wrong location
🏚️ Bought ‘problem properties’
💵 Paid too much tax

Hopefully, with the advice in this guide you can learn ahead of time how to navigate the market and make good investment decisions right form the very start!

David Garner

Book a Call With Me: Book a Free 1-2-1 Strategy Call With me or a Member of my Team and we will be Happy to Help you Start Exploring Your Next Investment in the U.S. Real Estate Market

Guide to U.S. Taxes for Foreign Real Estate Investors

IRS – Non-Resident Aliens Real Property 
Zillow
Member Managed vs Manager Managed LLCs
Single Member vs Multi-Member LLC
Operating Agreements for Real Estate LLCs
Best states to register an LLC
Real Estate Market Research
Investment Property Analysis
U.S. mortgages for non-resident aliens
U.S real estate purchase process
Due diligence for real estate purchases
U.S. real estate closing process