Published on and written by Cyril Jarnias
Setting up a long-term home or treating yourself to a pied-à-terre across the Atlantic is no longer just a simple “American dream” when you already have a significant estate. For a wealthy future expatriate, buying a primary residence or a pied-à-terre in the United States is a strategic choice: it serves as a dollar diversification tool, a hedge against certain political or currency risks, and a powerful tax and estate planning lever—provided the transaction is properly structured.
This overview examines U.S. real estate purchases from a wealth and international perspective. It covers three angles: where to buy, how to finance, and how to structure and pass on assets within the U.S. tax environment, which is often counterintuitive for a non‑resident.
Choosing the Right Destination: Life Residence or Investment Pied-à-Terre?
For a high‑net‑worth future expatriate, the first question is not “how?” but “where?”. Major coastal cities remain prestigious, but the actual geography of foreign demand and rental yields tells a different story.
Florida, Texas, California… and the Rising States
Recent data from the National Association of Realtors shows a very clear concentration of foreign purchases in just a few states. Five markets capture more than half of international demand: Florida, California, Texas, New York, and Arizona. Each has a distinct profile that should align with your project: primary residence, pied-à-terre, or high‑yield rental asset.
| Rank (foreign buyers) | State | Share of foreign purchases* | Dominant Profile |
|---|---|---|---|
| 1 | Florida | ~19–21% | Vacation + rental investment |
| 2 | California | ~14–15% | Education, business, Asian clientele |
| 3 | Texas | ~10–13% | Employment, families, Mexican and Indian buyers |
| 4 | New York | ~7% | Global metropolis, finance, urban pied-à-terre |
| 5 | Arizona | ~5% | Second homes, retirees, Canadians |
per periods and NAR reports
Florida dominates: more than one in five foreign residential purchases happens there. Its appeal rests on three pillars: no state income tax, rapid population growth, and a unique combination of vacation markets and year‑round rental demand. It is both a residence destination (especially Miami and the Gulf Coast) and a playground for long‑term “buy‑and‑hold” strategies.
Ten of the top fifteen U.S. cities for real estate investment by 2026 are in Florida and Texas.
California remains, despite recurrent wildfires and very high price levels, one of the preferred entry points for Asian buyers, particularly Chinese and Indian. Its climate, world‑class universities, and international air connectivity make it a natural choice for an expatriate wanting to combine career, children’s education, and asset value.
New York is back in the top 5 of foreign destinations with its best share since at least 2010. It is the quintessential market for a high‑end urban pied-à-terre, with a new tax landscape that requires a clear choice: make it a true primary residence or accept the specific tax treatment for non‑residents.
Life Residence vs. Pied-à-Terre: Very Different Buyer Profiles
Behind the states, the usage type varies enormously depending on buyers’ geographic origins. These profiles are instructive for a future expatriate wondering whether to target a primary dwelling first or a pied‑à‑terre / rental asset.
| Dominant Nationality | Primary Use of U.S. Property | Preferred States |
|---|---|---|
| Canadians | Vacation homes (≈49%) | Florida, Arizona, Sun Belt |
| British | Vacation (≈27%) | Florida, California, Ohio, Illinois, Arizona |
| Indians | Primary residence (≈66%) | Florida, Texas, California |
| Mexicans | Primary residence (≈53–60%) | Texas, Arizona, California |
| Chinese | Primary residence (≈45%) | California, New York, major metropolises |
Canadians remain among the most active, with a marked appetite for resort‑style second homes and the ability to pay cash for very high‑end properties, hence an average purchase price that can reach one million dollars. Conversely, Indian, Mexican, and some Chinese buyers primarily target primary residences—often single‑family homes in suburban areas tied to dynamic job markets (Texas, Florida, Sun Belt metros).
If you are settling in the United States for several years as a tax resident, with children enrolled locally and a professional activity on site, it makes sense to acquire your primary residence as early as possible in your expatriation journey. This purchase provides a significant lever for both wealth and tax planning.
However, if your goal is to have a periodic anchor—a few weeks per year, meetings, family stays—the logic of an urban pied-à-terre (Manhattan, Brooklyn, Miami Brickell, Los Angeles Westside, etc.) or a resort condo remains relevant. But it becomes fiscally more expensive in certain markets, particularly New York.
The Special Case of New York: Pied-à-Terre Under a Specific Tax
Setting up a pied-à-terre in New York has long been the classic strategy for large European or Latin American fortunes. The game is changing with the introduction of a surtax targeting non‑primary residences, under the so‑called “City Surcharge on Property That Does Not Serve as a Primary Residence,” often referred to as the pied‑à‑terre tax.
How the New York Surtax Works
This surtax applies to “covered properties” located in New York City that are not used as a primary residence by the owner or a close family member, nor permanently rented to a primary resident.
In broad terms, the system works as follows:
This is an annual surtax on top of standard property taxes, targeting single‑family homes (1–3 families) worth more than $5 million and condominium apartments or cooperative shares worth more than $1 million. Primary residences of owners subject to NYC income tax and long‑term rentals to residents using them as a primary home are exempt.
The rates are sharply progressive. For houses (Class 1), typical brackets range from 0.8% to over 1% per year on the value above $5 million. For high‑end condos and co‑ops, the surtax can be between 4% and 6.5% of the assessed value above the threshold.
Concretely, for a multi‑million‑dollar pied-à-terre used a few weeks a year and owned by a non‑resident, the annual bill can run into tens or even hundreds of thousands of dollars, on top of already high property taxes and maintenance fees. For a wealthy future expatriate who planned to keep their tax domicile outside New York while owning a large, mostly vacant apartment, the carrying cost changes the equation.
Primary Residence vs. Pied-à-Terre: A Strategic Choice in New York
This New York surtax reinforces a tension already well known to tax specialists: in New York, it is becoming increasingly expensive, even prohibitive, to be merely a “luxury visitor.” Several strategic consequences follow for a high‑net‑worth expatriate:
If you spend most of the year in New York, it is more rational to make it your primary residence, even if you give up an external tax domicile. If you keep your domicile elsewhere, a high‑end pied-à-terre incurs a duration‑based surtax that must be weighed. An alternative is to buy a property occupied year‑round by a relative (e.g., a student child) or rented for at least one year, which can qualify for targeted exemptions.
In short, settling in New York as a wealthy future expatriate does not preclude buying, but it requires clarifying from the outset whether the property will be your true center of life.
Understanding U.S. Taxation: Capital Gains, FIRPTA, and the Estate Tax Bite
For a wealthy non‑American buyer, U.S. real estate is not just a dollar asset; it is also a potential source of heavy taxation upon exit (sale) and especially at death. Three sets of rules apply: capital gains taxation, the FIRPTA withholding mechanism, and estate/gift taxes on U.S.‑situated assets.
Capital Gains on Sale: Long‑Term, Short‑Term, and NIIT
U.S. rules distinguish, as in Europe, between short‑term capital gains (held one year or less) and long‑term gains (held more than one year).
In the United States, short‑term capital gains are taxed at ordinary income rates, with a top rate of 37%. Long‑term gains benefit from preferential rates (0%, 15%, or 20% depending on taxable income). For a married couple filing jointly, the 20% rate applies above approximately $600,000. Additionally, high earners may be subject to an extra 3.8% Net Investment Income Tax when investment income exceeds $200,000 for a single filer or $250,000 for a couple.
For a primary residence, the tax treatment is more favorable if certain occupancy conditions are met: living in the home for at least two years out of the five years before the sale allows you to exclude up to $250,000 of gain ($500,000 for a couple). This extremely powerful benefit argues for a strategy where your U.S. life residence is acquired early and held for at least a few years.
FIRPTA: The Near‑Automatic Withholding for Foreign Sellers
For non‑residents selling U.S. real estate, a specific mechanism applies: the Foreign Investment in Real Property Tax Act (FIRPTA), which requires the buyer to withhold a percentage of the gross sales price and remit it to the IRS.
The standard withholding rate is 15% of the sales price, even if there is a loss. This rate can be zero for sales under $300,000 if the buyer makes it their primary residence, reduced to 10% between $300,001 and $1,000,000 in that case, and remains at 15% above $1,000,000 regardless of use.
It is only when the tax return is filed (Form 1040NR for a non‑resident) that the withholding is reconciled based on the actual gain and applicable rates. For a wealthy future expatriate, FIRPTA is not an additional tax but a very significant cash flow constraint that must be anticipated in the exit strategy, especially if the property is heavily financed.
The Real Risk for Foreign Fortunes: U.S. Estate Tax
Where wealthy foreign buyers most often underestimate the risk is in the area of estate tax. The United States applies a radically asymmetric system between residents/citizens and non‑residents.
| Decedent’s Status | U.S. Estate Tax Exemption on Taxable Assets | Maximum Rate |
|---|---|---|
| U.S. citizen or domiciled resident | Approximately $14–15M per person (2025–2026) | Up to 40% |
| Non‑resident, non‑domiciled (NRA/NRND) | Only $60,000 | Up to 40% |
For a non‑resident, all “U.S. situs” assets—including real estate located in the United States—are included in the estate tax base, with a meager exemption of $60,000. Above that, rates follow the federal schedule that can go up to 40%. In other words, a $5 million apartment directly owned by a non‑resident can generate an estate tax bill in the millions at the owner’s death.
Key points to remember:
– The base is the gross value of the U.S. property, not the gain or net value after debts, although certain debts and expenses are then deductible.
– Non‑residents may benefit from bilateral estate tax treaties, which sometimes increase the available exemption, but this is generally a prorated portion of a resident’s exemption, calculated based on the weight of U.S. assets in the worldwide estate.
– The marital deduction (tax‑free spousal transfer) does not automatically apply when the surviving spouse is not a U.S. citizen, unless a Qualified Domestic Trust (QDOT) is used.
For a wealthy future expatriate, this point completely changes how to think about holding a primary residence or pied‑à‑terre: keeping direct ownership in one’s own name is rarely acceptable beyond a certain value level.
Structuring Ownership: LLCs, Foreign Corporations, Trusts… and Estate/Tax Trade‑Offs
Pre‑immigration planning and wealth structuring around U.S. real estate have a central objective: reduce or neutralize estate tax exposure, while maintaining manageable tax on income and gains.
Direct Ownership, LLC, or Foreign Corporation: Major Differences
Several structures are used in practice by wealthy non‑resident families:
1. Direct ownership by the individual Maximum simplicity, but full exposure to U.S. estate tax on the property value. Additionally, in case of litigation, creditors can directly target personal assets.
An LLC protects the owner’s other assets from the property’s creditors. For tax purposes, the IRS treats a single‑member LLC as disregarded, so the owner is directly taxed. For estate tax, the property is considered a taxable U.S. asset.
3. Ownership via a foreign corporation Here, the asset held by the non‑resident is no longer a U.S. property but shares of a foreign company. Since shares of a foreign company are generally not “U.S. situs” assets for estate tax purposes, this converts a U.S. estate asset into a foreign asset outside the scope, while retaining economic exposure to the real estate. On the downside, using a corporation may lead to heavier income taxation (risk of double taxation, no preferential capital gains rates, etc.) and requires more structured governance.
For some estates, a “sandwich” structure (foreign company owning a U.S. company, which in turn owns the property) is favored. The goal is to combine:
– local visibility (U.S. company to deal with banks, managers, authorities),
– and estate protection via ultimate ownership by a foreign entity.
The Role of Trusts for International Fortunes
Trusts—whether domestic U.S. or foreign—play a central role for ultra‑high‑net‑worth families investing in the United States. They allow, among other things:
A trust can remove the real estate from the taxable estate by transferring ownership to a fiduciary vehicle for the heirs, plan transmission over multiple generations while bypassing civil law constraints (subject to compatibility), and manage governance through trustee powers and beneficiary rights tailored to the family setup.
Specialized tools exist, such as Qualified Personal Residence Trusts (QPRTs) for a residence, or irrevocable trusts combined with LLC‑type structures. For a future expatriate, the question is not “whether to use a trust,” but at what point and in which country it should be established to optimize both U.S. tax and compatibility with home‑country law.
The Effect of Estate Tax Treaties
If your country of residence or nationality has an estate tax treaty with the United States, you may sometimes qualify for an exemption well above $60,000, calculated pro rata based on the weight of your U.S. assets in your worldwide estate. Accessing these benefits requires:
To avoid double estate taxation, you must be able to demonstrate your tax domicile in the partner country, expressly claim the treaty benefits on Form 706‑NA for the estate, and set up the wealth structure early enough.
In other words, a wealthy future expatriate planning to spend years in the United States must coordinate the timeline for changing tax domicile, signing real estate purchase agreements, and setting up structures (corporations, trusts) with a global—U.S. and domestic—perspective.
Financing: Leveraging Foreign National Loans and Currency/Credit Arbitrage
Having a substantial estate does not necessarily mean always buying all‑cash. In fact, figures show that even among foreign buyers, only about half pay all‑cash. The other half uses credit markets, either in their home country or directly in the United States through programs designed for non‑residents.
Specifics of Foreign National Loans
Banks and specialized lenders have developed product lines clearly aimed at non‑American buyers whose primary residence and income remain abroad. Some key features:
– No need for a U.S. credit history;
– Ability to qualify with foreign income documents (tax returns, bank statements, financial statements) translated into English;
– Frequent use of “non‑QM” approaches: rather than your salary, the property’s ability to generate cash flow (rents) and the strength of your overall assets are examined.
Loans to non‑residents require a down payment of 25% to 40% (LTV of 50–70%), which favors wealthy investors: they can negotiate better terms and keep liquidity for other projects.
For a future expatriate targeting a very high‑end primary residence or a portfolio of several rental units, the most relevant tools in practice are:
– DSCR (Debt Service Coverage Ratio) loans for rental properties, where the only criterion is whether the rent covers at least the monthly payment (self‑supporting financing capacity);
– “Asset‑based” loans, suited for large liquid estates but moderate official income.
Playing with U.S. Debt in a Global Strategy
In 2026, U.S. rates remain higher than in the past decade, but the market is stabilizing. For a wealthy investor, the appeal of dollar financing lies in several factors:
A 60–70% LTV allows you to preserve cash for other investments while benefiting from full property appreciation. Rents received in dollars provide a natural currency hedge. If rates fall, future refinancing can unlock liquidity or lower costs.
In some cases, it may even be advisable to combine:
– a U.S. bank loan for the primary residence (where local anchoring and stability are valued by lenders),
– and financing from the home country for one or more rental properties (especially when domestic rates are lower or local banks accept a diversified asset pool as collateral).
For a wealthy future expatriate, dollar debt should be used as an optimization tool: finance USD assets that produce USD income, while reserving original currencies for other asset classes.
Managing Currency Risk: From Simple Prudence to Active Hedging
Buying a property in dollars with resources in euros, pounds, or Swiss francs exposes you to two types of currency risk:
– at the time of acquisition (exchange rate fluctuations between contract signing and closing),
– throughout the holding period (property value and cash flows expressed in your home currency).
Institutional investors systematically hedge these risks, and it is relevant for a very wealthy individual to adopt similar habits:
– Secure the amount in local currency needed for closing via forward contracts;
– Stagger currency conversions (dollar‑cost averaging) to smooth out volatility;
– Use multi‑currency accounts to convert only at the right time and limit implicit bank margins (often 3–5% of the amount).
For a future expatriate who will eventually receive income in dollars (U.S. salary, distributions, etc.), the logic is even stronger: your primary residence and pied-à-terre become both a wealth asset and a hedging instrument against a potential depreciation of your home currency.
Investing for Cash Flow: Balancing Residence, Pied-à-Terre, and a Rental Portfolio
A wealthy future expatriate does not arrive in the United States empty‑handed. Often, buying the primary residence goes hand in hand with thinking about building a rental portfolio, either to generate additional income or to gradually house children or family members.
Market trends clearly show that yield‑seeking is shifting:
– from major coastal metropolises, where gross yields are only 2–3%;
– to the South and Southeast (Florida, Texas, the Carolinas, Tennessee) and many mid‑sized cities, where gross yields of 5–7% or more remain common.
Midwestern and Northeastern cities like Toledo, Syracuse, Rochester, Hartford, and Buffalo show double‑digit price growth projections. With a modest entry ticket ($200–400,000), limited new supply, and sustained demand, these areas offer a good risk/return profile thanks to solid fundamentals (employment, demographics, price per square foot).
For a wealthy expatriate settling in New York or California, a coherent strategy could be to:
– Reserve the most expensive markets (New York, San Francisco, Los Angeles) for personal use (primary residence, pied‑à‑terre);
– Diversify the rental portfolio in high‑yield markets with good price dynamics (secondary cities in Texas and Florida, the Midwest, the rebounding Northeast).
Thus, the primary residence becomes a comfort asset, potentially tax‑optimized (partial capital gains exclusion), while rental properties provide financial returns and geographic diversification.
Planning for the Long Term: Resale, Estate, and Expatriate Status
Buying a primary residence or pied-à-terre in the United States as a wealthy future expatriate means accepting entry into a tax system that will follow you over time. A few guiding principles should inform your decisions from the start.
For the Primary Residence
– Aim to meet the conditions for partial capital gains exclusion (2 years of residence out of the 5 years before sale).
– Avoid, if possible, prolonged direct ownership if the property’s value far exceeds the $60,000 threshold for non‑residents’ estate tax; structure via an entity or trust from the start.
– Consider consistency with your tax domicile strategy: what you gain in estate tax optimization by remaining non‑domiciled can be lost in local surcharges (New York’s case) or management complexity.
For the Pied-à-Terre
– Never underestimate the full carrying cost: property taxes, specific surcharges (pied-à-terre tax in New York), condo fees, maintenance, insurance, and, for some, financing costs.
– Evaluate the feasibility of making the property partially productive (long‑term rental to a family member or third party) to benefit from local exemptions and offset expenses.
– Anticipate the resale: a poorly designed structure can turn a comfortable pied‑à‑terre into a tax headache upon exit, especially with significant capital gains and FIRPTA withholding.
For the Entire U.S. Real Estate Portfolio
– Have estate tax simulations run, taking into account any tax treaties between the United States and your home country.
– Set up a uniform structure rather than a patchwork of ad‑hoc entities created with each acquisition: a clear framework (foreign holding company, specific trusts, operational LLCs) is more robust.
– Organize “stress scenarios”: what happens if you die prematurely, leave the United States permanently, or if one of your children decides to stay long‑term? The structure must allow quick adjustments without triggering a disproportionate tax bill.
Conclusion: Making U.S. Real Estate a Pillar, Not a Weakness, of Your Global Wealth
Buying a primary residence or a pied-à-terre in the United States when you are a future expatriate with a significant estate is no longer a simple real estate transaction. It is a structural choice that affects the reference currency of your fortune, your exposure to political risks in your home country, the taxation of your heirs, and your lifestyle.
Five U.S. states are favored by foreign investors: Florida, Texas, California, New York, and Arizona.
As a wealthy future expatriate, you are in a privileged position: you can—and should—do both. A carefully chosen primary residence, in a state aligned with your life plan and tax tolerance, can become a formidable optimization tool (capital gains exclusion, dollar hedge, quality of life). One or more pieds‑à‑terre and rental assets, properly structured, offer diversification, income, and family anchoring.
Approach these decisions with the mindset of an institutional investor: market analysis, mastery of local and federal tax, upfront legal and estate structuring, careful currency risk management, and thoughtful use of debt. That way, your U.S. residence will become a strategic pillar of your global wealth.
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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.
