Real Estate Laws & Regulations to Know in the USA

Published on April 27, 2026 and written by Cyril Jarnias

Real estate in the United States attracts many foreign investors seeking lucrative opportunities and portfolio diversification. However, navigating the American legal and tax landscape can be complex. This article will guide you through the key real estate laws and regulations you need to know to invest confidently across the Atlantic.

The American Dream Within Reach: Can Foreigners Buy Real Estate in the USA?

Good news for international investors: the United States offers one of the most open real estate markets in the world. Unlike some countries that impose strict restrictions on foreign buyers, Uncle Sam welcomes international capital into its real estate sector with open arms.

Generally speaking, there are no federal restrictions preventing non-residents from acquiring real estate in the United States. Whether you are a foreign individual or an offshore company, you can legally buy, own, and sell residential or commercial properties on American soil.

However, a few nuances should be considered:

• Some states may have specific regulations regarding foreign ownership of agricultural land.
• Purchasing properties located near military or sensitive facilities may be subject to additional scrutiny.
• Foreigners must obtain an Individual Taxpayer Identification Number (ITIN) from the IRS to facilitate transactions and comply with tax obligations.

Despite these few considerations, the U.S. real estate market remains largely accessible to investors worldwide. In 2024, foreign buyers accounted for approximately 8.5% of the total volume of residential real estate transactions in the United States, with an estimated value of $53 billion.

Navigating the Regulatory Jungle: Key U.S. Real Estate Laws

The legal framework governing real estate in the United States is a complex mix of federal, state, and local laws. Here are the main regulations every foreign investor should know:

1. FIRPTA: A Tax Withholding to Anticipate

The Foreign Investment in Real Property Tax Act (FIRPTA) is a federal law that imposes a 15% withholding tax on the gross sales price when a foreigner sells real estate in the United States. This withholding is intended to ensure payment of taxes due on the realized capital gain.

• The withholding applies to sales of properties valued over $300,000.
• The buyer is responsible for the withholding and remittance to the IRS.
• The foreign seller can request a refund if the actual tax due is less than the withholding.

2. The Fair Housing Act: Against Discrimination

The Fair Housing Act prohibits discrimination in real estate transactions based on race, color, national origin, religion, sex, familial status, or disability. This law applies to the sale, rental, financing, and insurance of real estate properties.

3. Laws on Leases and Landlord-Tenant Relationships

• Security deposits and their return
• Maintenance and repair obligations
• Eviction procedures
• Rights and responsibilities of both parties

4. Zoning and Land Use Regulations

• The possibility of short-term rentals (e.g., via Airbnb)
• Types of renovations or extensions allowed
• Permitted building density

5. Laws on Disclosure of Defects

In most states, sellers are required to disclose known defects of the property. These laws aim to protect buyers against hidden defects and promote transparency in real estate transactions.

The Bottom Line: Understanding U.S. Real Estate Taxation

Taxation is a crucial aspect of any real estate investment in the United States. Foreign investors must navigate a complex tax system that involves obligations at the federal, state, and local levels.

Rental Income Tax

Rental income generated from real estate in the United States is taxable, whether the owner is a resident or not. The tax rate for non-residents is generally 30% of gross income, unless a tax treaty between the United States and the investor’s home country provides for a more favorable rate.

• Mortgage interest
• Property taxes
• Maintenance and repair costs
• Property depreciation

Capital Gains Tax

• For properties held less than one year: ordinary income tax rate (up to 37%)
• For properties held more than one year: preferential rate of 0%, 15%, or 20% depending on total income

Local Property Taxes

Property taxes are levied at the local level (county or municipality) and vary significantly from one region to another. On average, they represent about 1.1% of the estimated property value but can reach up to 2.5% in some localities.

Tax Planning and Investment Structures

• Limited Liability Companies (LLCs)
• Foreign Real Estate Investment Trusts (Foreign REITs)
• Limited partnerships

These structures can offer advantages in terms of asset protection, estate planning, and tax optimization. However, their relevance depends on each investor’s individual situation and often requires advice from an international tax expert.

Property Owner Rights: Protecting Your Investment

Investing in real estate in the United States confers a number of rights, but also responsibilities. Understanding these rights is essential to protect your investment and maximize its potential.

Right of Ownership and Use

• Use your property as you see fit (within the limits of zoning laws)
• Exclude others from your property
• Transfer or sell your property
• Profit from your property (e.g., by renting it out)

Landlord Rights

• The right to select your tenants (without illegal discrimination)
• The right to collect rent
• The right to access the property (with reasonable notice)
• The right to evict a tenant for non-payment or lease violation

Protection Against Unfair Seizures

The 5th Amendment of the U.S. Constitution protects property owners against unfair government seizures. If the government wishes to acquire your property for public use (eminent domain), it must offer you “just compensation.”

Right to Contest Tax Assessments

Property owners have the right to contest the tax assessment of their property if they believe it is overvalued. This process can potentially reduce the amount of property taxes owed.

Property Owner Responsibilities

• Maintain the property in good condition and compliant with local codes
• Pay property taxes and other associated charges
• Comply with environmental and zoning laws
• Ensure the safety of occupants and visitors

Regulatory Changes: What’s Changing for Foreign Investors

The regulatory landscape of U.S. real estate is constantly evolving. Here are recent changes and trends to watch for foreign investors:

Strengthened Control of Foreign Investments

In 2024, the Committee on Foreign Investment in the United States (CFIUS) expanded its scope to more closely scrutinize foreign real estate investments, particularly those near sensitive facilities or involving critical technologies.

Impact for investors: More thorough due diligence may be required for certain types of investments, especially in areas considered strategic.

New Regulations on Short-Term Rentals

Many cities and states have adopted stricter regulations regarding Airbnb-type rentals. For example, New York implemented a law in 2023 drastically limiting rentals of less than 30 days.

Impact for investors: It is crucial to check local regulations before investing in a property intended for short-term rental.

Tax Developments

The Tax Cuts and Jobs Act of 2017 brought significant changes, notably limiting the deductibility of mortgage interest and property taxes. While these changes do not specifically target foreign investors, they affect the overall profitability of real estate investments.

Impact for investors: More sophisticated tax planning may be necessary to optimize returns.

Strengthened Anti-Money Laundering Laws

The Corporate Transparency Act, effective in 2024, requires certain entities, including many real estate companies, to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).

Impact for investors: Increased transparency is required, particularly for investments made through corporate structures.

Trends in Sustainability and Energy Efficiency

More and more jurisdictions are adopting strict regulations on energy efficiency and sustainability for buildings. For example, New York City adopted Local Law 97, which imposes carbon emission limits on large buildings.

Impact for investors: Compliance costs can be significant, but these improvements can also increase the long-term value of properties.

Conclusion: An Attractive Market Despite Its Complexity

Real estate investment in the United States offers many opportunities for foreign investors, with a vast and diverse market. However, the complexity of the legal and tax framework requires a cautious and well-informed approach.

• Foreigners can freely buy real estate in the USA but must comply with certain tax and reporting obligations.
• U.S. real estate taxation is complex, with implications at the federal, state, and local levels.
• Property owner rights are well protected but come with significant responsibilities.
• The regulatory landscape is constantly evolving, requiring regular monitoring and expert advice.

Despite these challenges, the U.S. real estate market remains attractive for international investors. With a good understanding of laws and regulations, adequate tax planning, and a well-thought-out investment strategy, opportunities to create value and generate income are plentiful.