Do Foreign Buyers of U.S. Real Estate Have Financing Requirements?

Florida real estate transactions are incredibly complex. With such large sums of money at stake, it is important to make sure that you understand all of the requirements associated with purchasing real estate in Florida. Often, this means you will need to work with an experienced Florida attorney who understands the various requirements related to real estate purchases, including financing the purchase. For Florida residents, these requirements can be confusing. They can be even more confusing for foreign buyers looking to purchase Florida real estate, as they will face some requirements unique to them. A recent article from Investopedia notes that Florida accounts for 22% of foreign real estate purchases in the U.S., making these requirements important to understand.

Financing Institution Restrictions

While not a requirement, it is often helpful to apply for a mortgage for U.S. real estate with a financial institution that has a presence both in the United States as well as in your home country. There are several international banks that fit this description, and working with one of them to secure financing can often speed up what might otherwise be an even lengthier process. Many U.S. financial institutions will not provide financing for foreign buyers because such buyers understandably pose a higher risk for those lenders. Because they may have no recourse to recoup money foreign buyers could end up owing, as it is more difficult to track them down overseas.

Working with a financial institution that has this type of presence can also help foreign buyers obtain more favorable lending rates. Often, financial institutions will require foreign buyers to pay a higher interest rate and may require a substantially higher down payment – often up to 30% of the real estate’s value. Purchasing your U.S. real estate in cash could help you avoid many of the issues associated with financing, but with the rising cost of U.S. real estate, doing so might not be an option for all buyers. Whether you are looking to purchase your U.S. real estate with cash or through financing, you will want to consider things like the current exchange rate and trends affecting it in order to take advantage of the most favorable conditions.

Tax and Government Considerations

There might be some important tax considerations that affect the purchase and/or sale of U.S. real estate owned by a foreign purchaser. You will likely need an Individual Tax Payer Identification Number, and will need to understand the process for obtaining and maintaining one. As such, the International Real Property Foundation says that a foreign real estate owner may be subject to U.S. income tax regulations for the sale of U.S. real estate. Additionally, foreign buyers of U.S. real estate may need to comply with various non-tax reporting requirements. There may also be state and/or federal restrictions on foreign buyers looking to purchase U.S. real estate if their home country does not permit U.S. buyers the same opportunities.

Legal Assistance with Your Florida Real Estate Purchase

Working with a legal team that is experienced in helping foreign buyers with their Florida real estate purchases can help you approach your purchase with more confidence and clarity. It is important that you understand all of the different state and federal rules that could impact your real estate purchase. Finding the right attorney is an important step in making sure your Florida real estate purchase successfully meets your needs. Contact us at 305-921-0440 or email us at [email protected] to schedule a consultation to find out more about the financing requirements for foreign buyers of Florida real estate.

Read more at Do Foreign Buyers of U.S. Real Estate Have Unique Financing Requirements?