According to new reports from the NAR and the CAR, foreign nationals (citizens of other countries) are buying U.S. Real Estate in increasing numbers, throughout our country.
A recent report I read had a handful of highly interesting points that I'd like to share with you here...
Interesting Fact # 1... 62% of foreign buyers are buying with all Cash. Perhaps this is the case because they do not have a Social Security Number, or a U.S. FICO score in which to borrow money.
There are 5 countries showing high interest in U.S. real estate:
- Canada
- Mexico
- China
- United Kingdom
- India
These countries represent 53% of the transactions.
Just 4 States Account For 54% of All International Transactions In the 12 Months ending April 2010:
- Arizona
- California
- Florida
- Texas
For the 12 months ending April 2010, foreign purchases of U.S. residences totaled $64 Billion. This is almost twice the amount ($36 Billion) of foreign transactions taking place during the 12 months prior (the 12 months ending in April 2009). Why is this such a powerful trend?
4 Top Reasons Foreign Buyers Buy Property In the U.S.
- 43% view it as a good location to own property
- 27% view it as a profitable investment
- 31% of the Foreign Buyers view U.S. property as a secure investment
- The U.S. Dollar has depreciated, allowing for stronger value for foreign citizens
The majority of the foreign investment has taken place in warm weather states, like California, Arizona and Florida. NAR reports that if the same market conditions that brought an increase in foreign investment continue to manifest themselves, foreign real estate investors should continue to buy U.S. property in the near term.
What Are The Tax Ramifications?
Because I'm not an Accountant, I can't advise anyone directly; however I found out in some online research that there are tax laws in the U.S. that require foreign nationals to pay income tax (to the IRS) on rental properties bought here in the U.S.
Restrictions On Foreign Persons Owning Real Property:
No such restrictions in California (per California Association Realtors Legal Department).
Ultimately, foreign investment in the U.S. real estate market represents a huge market. Foreign nationals understand that compared to other countries in the world, American real estate is economical, stable, and an overall wise investment. Substantial foreign investment is likely to continue.
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