Thinking of buying an investment property in the United States? Well, it has never been a better time to take advantage of the strong Aussie Dollar and depressed property prices in the US. However, here are some important points to consider.
Pick a growth city that has a strong economy and has not suffered the wild roller coaster ride of property prices. Strong and steady is the right approach, not Las Vegas flashy. There are good sources of information that rate US cities, including Kiplinger Magazine. Kiplinger recently listed the top ten best value cities in the US, based on their vibrant economies, reasonable living costs and great amenities. The top three are Omaha, Nebraska; Charlotte, North Carolina and Nashville, Tennessee.
Consider markets where you don’t have to be concerned about crime. This can impact your ability to rent the property and your property manager from collecting the rent. The quality of school districts can also vary widely, even in small geographic areas. These considerations are important to families moving into an area and looking for a house to rent.
Work with a trusted and experienced Realtor who knows the local market and can find the best property to fit your needs. Not all US real estate brokers are Realtor’s. Realtor’s are held to a higher code of ethics. Brokers and Realtors are licensed in specific states only, so when you pick a location to invest, work with a knowledgeable and licensed Realtor in that market.
Leverage technology to allow you to complete the entire transaction from Australia. A good Realtor will have HD quality videos of potential properties available for you to view via the web. Skype allows you to attend the closing via video conference, using a simple internet connection.
Understand FIRPTA – probably the least known but biggest impact for foreigners investing in US property is this IRS rule. FIRPTA is the Foreign Investment in Real Property Tax Act of 1980, which taxes foreign investors when they eventually sell their US real estate, and yes, it is pronounced “furpta”. Essentially, the closing Attorney withholds 10% of the sale price of the house from the proceeds of the sale and sends it to the IRS. There are exceptions to this rule. Properties that sell for less than $300,000 USD do not incur this tax. Investors would do well to consider properties in less expensive cities in the US.
So, while there are many things to consider when purchasing property overseas, the process is not difficult when partnering with an experienced Realtor.
Hope that helps
David Karp
[email protected]
http://www.walkaboutpropertiesusa.comDavid
I left you a message. I am in Charlotte North Carolina. You can reach me on Skype at Alex Franks 2002. Would like to talk. When you get a chance.
thanks
alex
Good info, although I seriously doubt many of the homes that investors are buying will sell North of 300k.
Canada withholds 25% of your proceeds no matter the price, I learned that the hard way, I paid cash for a 500k home up in Kelowna BC back in 01.. kept it 2 years sold it, and the closing attorney sent 25% to the Canadian Gov. I had to file a tax return and finally got my money back after 9 months. They kept 25%of my gain which was not a lot since I sold it after owning it a short time. However I had plans for the 125k they kept.
This 300k rule for 99% of the investors on this site will never come into play. Not only are the prices so much lower, the majority of the low end rentals will never sell for what people are paying for them
JLH
Jay actually met with David in my office the other day. Soon as I saw Charlotte posting here. Was not used to hearing any one else speak about Charlotte. Brought David down and showed him around, met some of our staff , and showed our system , and what we are up to in Charlotte. Explained what we feel is the market price that foreign investors are buying and why.
In Miami the $300k and higher priced real estate .Then the tax rule might apply other wise not seeing it at all with investment deals in the USA…
Alex
It was good meeting Alex last week. I drove down from Charlotte to his office in Rockhill, SC. I appreciate Alex taking some time to walk me through his business model and meeting people in his office.
I agree that most won't reach the FIRPTA requirement. And as I noted in my original post at the top of this string, "Investors would do well to consider properties in less expensive cities in the US." I am glad I raised awareness of this tax law, as it would hurt to learn it the hard way.
David
[email protected]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
