5 Top Must-Knows For Foreigner Purchasing US Properties

Located along Arizona's southern boundary, the City of Nogales, Arizona, borders Nogales, Sonora, Mexico, and is Arizona's largest international border city. As a result, it is customary for Mexican foreigners to buy and sell real estate in Santa Cruz County, Arizona. Mexico's foreign buyers came in 2nd in 2023, and accounted for 11% share of the top ten countries of origins for foreign buyer purchases.   

 

According to the National Association of Realtors®, the U.S. is the largest economy in the world and a land of immigrants, the United States (U.S.) attracts people from across the globe who want to live, work, and study here. International clients are an important market niche served by REALTORS®. Since 2009, the National Association of REALTORS® (NAR) has conducted an annual survey of its members to measure the volume of U.S. residential real estate transactions with international clients.

 

In terms of location, Florida, California, Texas, North Carolina, and Arizona are the top preferred locations based on the number of reported purchases. The bulk of international purchases are predominantly all-cash sales for single-family homes intended to be used for residential purposes. The buyer's employment, vacation preferences, family, educational, and investment objectives affect the choice of location and the type of property desired.

 

Each state in the United States has its own set of rules regarding the purchase of real estate, including the type of purchase contract used, the method of closing the sale and even the duties and titles of the individuals involved. If you are thinking of buying a property in Arizona and decide to sell your property. Per the Foreign Investment In Real Property Act, U.S. imposes income tax on foreign persons selling U.S. real estate. You may be required to withhold 10% of the amount realized from the sale. The amount realized is normally the purchase price. The escrow company will withhold the amount at the time of closing the transaction. 

Something to keep in mind is that the requirements for getting a home loan largely depend on one’s residency status. Down payment requirements are usually higher for foreign national borrowers. The minimum down payment is usually 30% of the total purchase price of the property. Mortgage lenders have individual guidelines and may not be able to offer a loan in all the US states. Following links will help you get started on financing your property in the US as a foreign buyer.

Escrow companies are commonly used in real estate transactions to facilitate payment and utilized as a third party for the sale of a home. Home buyers send funds to an escrow company, which holds the funds until the transaction is finalized. Once the buyer confirms receipt and satisfaction, the funds are released to the seller.

 

By law, banks report all cash transactions that exceed $10,000— the international money transfer reporting limit is set by the IRS. In addition, a bank may report any transaction of any amount that alerts its suspicions. Foreign buyers will also want to give consideration to issues such as currency exchange rates, international wire transfers, banking systems, multi-national taxation and accounting issues, and import/export restrictions regarding currency and household goods.