real estate

Foreigners can buy US homes easily

Steve McLindenQuestionDear Real Estate Adviser,
I am an international college student with enough money to buy a house in the United States. I will finish my schooling there in three years. Will owning a property in the U.S. allow me to live as a resident? Do you have any suggestions about how to handle this?
-- Mett

AnswerDear Mett,
Sorry, but buying a home in the U.S. will not afford you residency status. At the depth of the housing crisis, there was a legislative clamor to offer U.S. residency to foreigners buying homes at a certain purchase-price level as a way to help jump-start sales. But that didn't materialize.

In some countries, the purchase of a property does entitle buyers to a residency permit -- but it won't earn you a green card in the U.S.

However, it is relatively easy to buy a home in the U.S. as a foreign national. You will likely need at least a 20 percent down payment to get a U.S. mortgage, and that doesn't sound like much of a problem based on your savings.

I would advise against paying cash for a home because that can tie up all your cash reserves, which you might need in case of an emergency or unexpected capital expense.

Be sure to hire a real estate agent experienced in purchases by international buyers. It's a safe bet the larger real estate agencies in your area will have one or more such experts on staff.

If you plan to occupy your house as a student for your last three years of college, you could supplement your income and/or help pay for the house by taking on carefully screened renters as roommates. However, this has additional tax implications and puts you in the position of being a landlord. You would need to get a U.S. taxpayer identification number if you do this.

Again, choose your tenants wisely. By the way, homes purchased near major colleges tend to hold their values pretty well.

If the home you buy is valued at $300,000 or more, make sure you read up on the Foreign Investment in Real Property Tax Act, or FIRPTA, requirements.

Because of FIRPTA, the title or escrow company hired to transfer the paperwork when you sell the place may be obligated to hold back a chunk of your equity in the property. This ensures that the U.S. government gets its 10 percent tax cut when you sell.

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