Published on and written by Cyril Jarnias
Buying a house or apartment in the United States is a dream for many foreigners: a vast market, a solid legal framework, a strong dollar, and stable rents. But as soon as you dive into the details—visas, ITIN, banks, taxes, FIRPTA, LLCs, notaries, property titles—the dream can quickly turn into a maze.
The U.S. legal framework is simple: almost anyone can buy, without nationality or residency requirements. The main challenges are financing, taxes, and practical organization.
This article offers a step-by-step guide, in English, to understanding how to buy real estate in the United States as a foreigner, based on the data and mechanisms actually used by international investors.
1. What You Need to Understand Before You Start
Before talking about banks or signatures, three key ideas need to be clarified: the legality of the purchase, the lack of connection to immigration, and the role of the states.
U.S. federal law does not prohibit foreigners from owning real estate. A non-resident can buy a single-family home, condo, duplex, income property, or commercial or industrial space. The basic principle is the same as for a citizen: full and complete ownership.
It is not necessary to have a visa, a green card, or to set foot on U.S. soil to become a property owner. The purchase can be done entirely from abroad via a power of attorney and remote signing before a U.S. notary or consulate.
The second point, often misunderstood, is that owning real estate provides no immigration benefits. Buying an apartment in Miami or a house in Houston does not make getting a visa easier, does not create any right to a green card, and has nothing to do with programs like EB‑5, which are based on other criteria (investment amount and nature, job creation, etc.).
Even though the federal government broadly allows foreign ownership, some states impose targeted restrictions, especially for agricultural land or land near military installations. Others have adopted specific rules for certain countries. For example, you can freely buy a condo in New York, but additional checks may be required for farmland in Texas or Florida.
2. Preparing Your Foreign Buyer Profile
Buying in the U.S. requires proving your identity, your financial capacity, and—as soon as there are rents or a resale—registering with the U.S. tax system. Three elements come up consistently: a passport, a tax identification number (ITIN), and a local bank account.
The primary identity document is the passport. It is recommended that it be valid for at least twelve months from the start of the project, as it will be required for the bank, the ITIN, signing at the title company or attorney, and sometimes by insurers.
To report U.S. income (rent, capital gains), open a bank account, or apply for a mortgage, non-residents without an SSN must obtain an ITIN (Individual Taxpayer Identification Number) issued by the IRS.
The ITIN is obtained via Form W‑7, accompanied by a passport (or certified copy) and a clear reason (e.g., rental investment, filing a return, etc.). The application can be made remotely or in person, often with the help of a Certifying Acceptance Agent. Processing times announced by the IRS range from 7–11 weeks to about 3 months depending on the source.
To invest in the U.S., it is highly recommended, or even required, to have a U.S. bank account. It is used to manage the earnest money deposit, pay closing costs, receive rents, pay property taxes and ongoing expenses. To open one, banks typically ask for a passport, an ITIN or SSN, proof of address (in your home country or the U.S.), and sometimes a reference letter from your home bank. Opening remotely is possible but more complicated than doing it in person; many investors take advantage of a site visit to do it.
3. Structuring the Acquisition: In Your Name or Through a Company?
The next major decision concerns the legal ownership structure: buying in your own name or through an entity (LLC, foreign corporation, trust, etc.). This affects liability, income taxation, and estate planning.
The simplest way is to buy in your own name. This is common for a non-rented second home, used by the family for vacations or children’s studies. You sign the deed personally, declare rental income directly (if any), and personally bear the risks associated with the property (lawsuits, damage, etc.).
A U.S. LLC can isolate the property from personal assets, limiting rental and accident risks. It is also a tool for tax and estate structuring, but its use is not generic and depends on your country of residence, the size of the investment, your family situation, and tax treaties.
You can also go through a foreign corporation. This can, in some cases, limit exposure to U.S. estate tax for non-domiciled individuals, who only have an exemption of about $60,000 on U.S. assets, whereas citizens or residents have a much higher threshold. However, this type of setup can complicate taxation in your home country, trigger rules on controlled foreign corporations, or change the treatment of dividends.
Experts stress the need to think about the overall structure even before making an offer, because changing the structure afterward is never tax-neutral.
4. Building Your Local Team: A Must
A successful remote purchase relies on a team. The U.S. system relies less on civil law notaries than in continental Europe and more on a network of private players: real estate agent, title company, attorney, accountant, lender, home inspector, property manager.
The agent must be licensed in the state where the property is located, ideally a member of the NAR and CIPS-certified for international buyers. They help analyze, negotiate, and coordinate until closing. Their commission is often paid by the seller, but buyer agent fees are now negotiable: clarify payment before showings.
In several states (“attorney states” like New York, New Jersey, or South Carolina), an attorney is required to draft or validate contracts, perform title searches, and handle closing. In others (“escrow states” like California or Florida), a title company can fill this operational role. In any case, for a foreigner, having the contract and deed reviewed by an attorney specializing in real estate and familiar with non-residents is highly recommended.
A tax accountant or CPA specializing in non-resident aliens (NRAs) is essential as soon as there are rents or capital gains. They can advise on the Section 871(d) election to tax net income instead of 30% on gross, and prepare FIRPTA forms upon resale.
This team also includes the loan officer (bank or broker), a certified home inspector to check the property’s condition, and, if the project is rental, a property manager to handle leasing, collections, and repairs.
5. Financing Your Purchase: Cash, Credit, or Alternative Structures
Contrary to what many investors think, you don’t have to pay cash to buy property in the U.S. More and more banks and specialized lenders offer loans to foreigners, but with stricter conditions than for U.S. residents.
Most programs for non-residents require a down payment of 25% to 40% of the purchase price, sometimes 50% for land or very specific properties. That’s far from the 3–5% a U.S. citizen can put on a primary residence with an “FHA” loan or other federally backed program. Moreover, access to these federal programs is practically closed to non-resident foreigners.
Rates on portfolio loans for foreigners are generally 0.5 to 1 point higher than the domestic market.
Among the products best suited for international investors are Debt Service Coverage Ratio (DSCR) loans. Here, the bank focuses not on your salary or employment history, but on the property’s ability to generate enough rent to cover the loan payment. If the estimated or actual rent covers the monthly payment, the application can be accepted, sometimes up to 70–80% financing, even without a U.S. credit history.
In addition to standard loans, there are various options (fixed-rate 10-30 years, adjustable rate, bridge loans, expat programs). All require a complete application including proof of income, 6 months of bank statements, and reserves equal to several months of payments.
For those who prefer to avoid bank constraints, cash payment remains common. According to statistics, nearly half of foreign purchases are in cash. This choice can appeal to a seller (simpler offer, shorter timelines) but ties up a lot of capital. Also keep in mind that in the U.S., any cash payment over $10,000 triggers reporting to anti-money laundering authorities, and the source of funds must be documented.
6. The Step-by-Step Purchase Process
Once the structure and financing are clarified, the concrete process follows a fairly standard pattern in most states. The main difference from a U.S. buyer comes from additional delays for the ITIN, international wire transfers, or verification of foreign documents.
The first step is to determine your budget and strategy: vacation home, housing for a student child, long-term rental investment. This choice guides the type of property (single-family home, condo, multi-unit) and location (major metros, secondary cities with good yields, tourist areas for short-term rentals).
Once the target is defined, you start searching, often online, via real estate portals or your agent’s tools. In-person visits are ideal, but more and more buyers proceed via virtual tours, detailed videos, and photo reports, relying on their local team’s expertise.
The earnest money deposit typically represents 1 to 3% of the purchase price, and may be higher in competitive markets.
The seller can accept, reject, or make a counter-offer. Once an agreement is reached, the parties sign a final purchase contract. This document is legally binding and organizes the next steps: inspections, financing, closing.
An inspection period of about ten days opens, during which a certified inspector examines the structure, roof, electrical, plumbing, and pests, and produces a detailed report. Depending on the region, specific checks (radon, termites, lead) are added. If major defects are found, the buyer can negotiate repairs, a price reduction, or cancel the transaction without penalty if the contract allows.
In parallel, the lender (if financing) orders an independent appraisal to confirm that the property’s value justifies the loan amount. The bank will not finance more than a predetermined percentage of this appraised value, even if the buyer offers a higher price.
The other aspect of due diligence is legal. A title company or attorney performs a title search covering at least 30 years, to verify that the seller is the true owner, that there are no unpaid liens (old mortgages, property taxes, judgments), hidden easements, or inheritance issues. This step is crucial because, unlike the notarial systems in some home countries, the U.S. land registry is not 100% guaranteed. It is precisely to address these uncertainties that title insurance exists.
After these checks, if everything is satisfactory, the bank issues final loan approval, and the closing date is confirmed.
7. Closing and Costs to Expect
The closing is when ownership officially changes hands. It takes place either at the attorney’s office, the title company, or remotely via a mail-away closing or a power of attorney signed before a U.S. notary or consulate.
On closing day, the buyer signs the deed of transfer, the loan agreement, a statement on the source of funds, and tax forms. The buyer pays the balance (down payment minus the earnest money already deposited) plus closing costs. Once funds are received and documents are recorded with the county, ownership is transferred and keys are handed over.
The timeline from contract signing to closing varies. For a resident buyer with a conventional loan, it often takes 30–45 days. For a foreigner, financed transactions typically take 45–90 days, accounting for bank requirements and international transfers. For cash purchases, the process can be compressed to 2–4 weeks if all parties are ready.
Closing costs generally amount to 2 to 5% of a property’s purchase price.
A simplified table shows the typical ranges.
| Cost Item | Who Usually Pays? | Typical Range (as % of price) |
|---|---|---|
| Title insurance (owner + lender) | Buyer | ~0.5% to 1% |
| Title search and recording | Buyer | ~0.2% to 0.5% |
| Attorney / title company fees | Buyer | ~0.5% to 1% |
| Transfer taxes / stamps | Buyer / Seller (varies by state) | ~0.05% to 3% (depending on state) |
| Bank processing / appraisal fees | Buyer | ~0.5% to 1% |
| Real estate agent commission | Seller (often) | ~3% to 6% (split between agents) |
On a $300,000 property, buyer‑paid costs can thus range from $3,000 to $15,000 in addition to the down payment. Add homeowner’s insurance, sometimes required from closing if there is a loan.
8. Property Titles and Title Insurance: A U.S. Specificity
For a European investor accustomed to the apparent security of a centralized land registry and a strong notary system, the role of U.S. title insurance is often puzzling. In the U.S., property records are more fragmented and can contain errors or omissions. As a result, disputes can arise decades after a transfer.
Title insurance is an indemnity policy that protects the buyer (owner’s policy) and the lender (lender’s policy) against financial losses from title defects that existed before the purchase. It covers, for example, the discovery of a forgotten heir, an old unreleased mortgage, a forged deed, or an erroneous recording. If a third party manages to void or limit your ownership rights, the insurer compensates the loss (up to the policy amount) and covers defense costs.
The premium is paid once, at closing. For the buyer, the average cost of an owner’s policy is around $700 to $2,000, and the lender’s policy about $500 to $1,500. In some states, rates are regulated; in others, it’s worth comparing offers, looking at both the quality of the search and the price.
Title insurance does not cover the physical condition of the property, its compliance with zoning rules, or issues visible during an inspection. It is crucial not to neglect the inspection in favor of title insurance alone.
For foreigners, another layer of complexity can arise from local so-called “Alien Land Transfer” laws, which may, in certain states, restrict access to certain types of land for nationals of specific countries. Insurers and intermediaries sometimes need to obtain certifications about the buyer’s status. This does not undermine the market’s accessibility principle, but adds an extra compliance layer.
9. Taxation of Rents and Capital Gains: The Framework to Know
One of the most sensitive topics for a foreign buyer is taxation. It comes into play at three levels: rental income, capital gains upon resale, and, for non-domiciled individuals, estate tax.
A non-resident who rents out their U.S. property is, by default, taxed at a flat rate of 30% on the gross rent considered FDAP (Fixed, Determinable, Annual or Periodical) income. In other words, without a special election, expenses (loan interest, property taxes, management fees, maintenance, depreciation) are not deductible: the IRS applies 30% directly to the rents received.
To avoid the 30% tax on gross income, non-resident investors can elect under Section 871(d) of the tax code to treat rents as effectively connected income (ECI). This allows deducting expenses (interest, property taxes, management, repairs, depreciation, etc.) and calculating tax on net profit using a progressive rate schedule similar to that of residents. This election is typically made with the first tax return and remains in effect until revoked.
Income must be reported each year to the IRS, via a specific return (e.g., Form 1040NR for a non-resident). If income is held through an LLC, corporation, or more complex structure, additional forms may be required. This is where the role of a specialized CPA becomes crucial.
Upon resale, capital gains on real estate by foreigners are taxable. If the property is held for more than 12 months, the long-term gain is taxed at 15–20% depending on income. Under 12 months, it is treated as ordinary income with rates up to 37%. State taxes are added in most states, except those with no income tax.
Foreign residents also have to deal with a specific mechanism: FIRPTA (Foreign Investment in Real Property Tax Act). This law requires the BUYER to withhold a portion of the sale price when buying from a foreign seller and remit it to the IRS as a withholding tax. The standard rate is 15% of the total price, not just the gain. However, there are exceptions, notably when the buyer intends to use the property as a personal residence: no FIRPTA withholding if the price is $300,000 or less and the buyer occupies the property; 10% for $300,001 to $1 million; 15% above that or for investment use.
This withholding is a deposit, not a final tax. The foreign seller must report the actual gain to obtain a possible refund. They can also request a reduced withholding certificate (Form 8288‑B) before the sale if the expected gain is low or zero.
Last area: estate tax, the federal tax on inheritances. For a U.S. citizen or tax resident domiciled in the U.S., the exemption is very high (several million dollars). For a non-domiciled foreigner, however, the exemption on U.S. assets is limited to $60,000. Above that, rates can reach 40%. Concretely, if a non-domiciled person owns a U.S. property worth $500,000 at death, their estate could theoretically be taxed at 40% on about $440,000, subject to tax treaties and ownership structure.
It is precisely to manage this issue that many foreign investors, with their advisors, use structures like foreign corporations or trusts, which can remove U.S. assets from direct estate tax exposure, while generating other tax consequences that must be carefully managed.
10. Choosing Your Market and Managing Remotely
Knowing how to buy is not enough: you also need to know where and how to manage the property once acquired.
The traditional top destinations for foreign capital remain Florida, California, Texas, New York, and Arizona, which account for a large share of recent international purchases. Florida, for example, attracts about a fifth of foreign buyers, driven by its climate, strong tourism, and lack of state income tax.
More and more foreign investors are turning to cities in the Midwest or South like Cleveland, Kansas City, Birmingham, Toledo, Tuscaloosa, Chattanooga, Memphis, St. Louis, Cincinnati, or Milwaukee, where rents are solid and gross rental yields high, in states with landlord-friendly laws like Ohio, Indiana, Missouri, Tennessee, or Alabama.
For a non-resident, the key to success in these lesser-known markets is organizing remote management. It is illusory to think you can directly handle tenants, repairs, and paperwork from abroad. A professional property manager becomes essential. They handle marketing the rental, screening applicants, collecting rent, coordinating repairs, and, if necessary, managing delinquencies and eviction procedures.
Digital tools included: rent payment platforms, lease management portals, online tracking of expenses and revenue, quarterly reporting. Visits, key handovers, move-in/move-out photos, and maintenance reports can be digitized for remote oversight, provided you choose your local partners carefully.
11. Summary: A Real Estate Transaction, But Also a Tax and Estate Planning Project
Buying real estate in the United States as a foreigner is neither reserved for an elite nor an improvised operation. On the legal side, access is surprisingly open: no visa needed, no nationality quotas, no residency requirement. On the practical side, the process is streamlined: clear timelines, standardized steps, proven protection tools (title insurance, escrow), and well-established remote closing procedures.
Success in U.S. real estate investment rests on four factors: tax preparation, choice of ownership structure (individual, LLC, foreign corporation, or trust), quality of the local team, and understanding of key mechanisms (ITIN, Section 871(d), FIRPTA, estate tax, state rules). The structure chosen leads to radically different outcomes for rental income tax, capital gains tax, and estate tax.
The most prudent approach is therefore to consider this purchase not simply as an isolated real estate deal, but as a full-fledged international wealth planning project. This requires:
To succeed in your real estate investment, it is essential to: clarify your goals (personal use, rental yield, dollar diversification, inheritance); get advice from professionals who know both the local real estate market and non-resident taxation; anticipate cash flows (down payment plus 2–5% closing costs plus reserve funds); and integrate taxation on rents, gains, and estate from the outset.
Once these foundations are laid, the U.S. real estate market, with its size, relative transparency, and depth, can become an excellent diversification pillar for a foreign investor, whether in iconic major metros or in those high-yield secondary markets where many international investors are already building long-term portfolios.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
