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• BUYERS
• International Buyers for Cape Cod Real Estate

International Buyers for Cape Cod Real Estate

With the Value of the US Dollar and ease of flight to the USA, many foreigners are purchasing Cape Cod Real Estate.  Our Climate is attractive and Political status is stable making a purchase on Cape Cod desirable.                                                                                                   

Federal Government Requirements

In the United States there are very few restrictions on international real estate investors, buyers, or sellers.  The only exceptions concern national security, hostile countries, purchase or control of federal lands, and purchasing a business in a sensitive category.
As an international investor (foreign national) you may take title to real estate in your own name, in the name of a domestic corporation, foreign corporation, a limited partnership, a limited liability company, a joint venture, a real estate investment trust (REIT), or a foreign pension plan.
 As a foreign national investor purchasing property in the United States you may acquire, transfer, or be involved in a real estate transaction without the permission or approval from any federal, state, or local governmental entity. You just need to comply with the following three issues.

1. Visitors Visa & Immigration Laws:  Title 8 of the United States Code details all U.S. Immigration Laws.  Every non-U.S. citizen who wants or needs to enter the United States must have a VISA. There are over 40 kinds of non-immigrant visas so you should consult an immigration attorney and a U.S. Embassy or Consulate to find out which type of visa is appropriate to your situation. 

             Most foreign nationals who want to own property or live permanently in the United States commonly use
             the following types of visas.

             B-1 (Business Visitor):  This visa allows you, as a foreign citizen, to incorporate in the United States,
             acquire property, sign contracts, and perform other specific business activities. However, it doesn't permit
             you to directly manage a U.S. based business or receive U.S. sourced wages (income from employment).

             L-1 (Intra-Company Transferee): This visa pertains to foreign individuals who own or work for a foreign
             corporation that is directly related to a U.S. corporation. It allows you to enter the U.S. if you are employed
             in an executive, managerial, or special-knowledge capacity for that corporation.

             E-1 (Treaty Trader): This visa is available for foreigners from nations that have a trade treaty and
             commerce with the United States.  It permits you, your spouse, and your minor dependants to live in the
             U.S. for an indefinite number of years.

             E-2 (Treaty Investor): This visa allows a foreign person to live in the U.S. while actively investing in,
             operating, and managing a United States based business.

             EB-5 (Million Dollar Investor): This visa is available for non-U.S. citizens who plan to make a capital
             contribution of $1 million ($1,000,000) or more to a U.S. Based enterprise.

             H1-B (Temporary Professional Worker): This visa allows a foreign person with a bachelor's (4-year
             college or university) degree or higher to remain in the US for up to 6 years while employed in a
             professional position with a United States employer.

             O and P (Extraordinary): These visas are available for aliens of "extraordinary" ability in the sciences,
             education, business, or athletics to live and work in the United States.

             Non-Immigrants (Temporary Residents) who already own real estate property in the United States can
             enter as short- term visitors for a vacation, to study as a full-time student, to conduct special projects, or to
             be temporarily employed, as well as other reasons.  Some types of Visas for Non-Immigrants are B-1 &
             B-2 (Business Visas), E-1 & E-2 (Treaty Trader & Investor Visas), F-1 (Full-Time Student Visa), L-1 (Inter-
             Company Transfer Visa), Investment Visas, and the Visa Waiver Pilot Program.
     
      2.    Federal Taxation: Non-immigrants or non-residents must pay taxes on the income that they make from
             their investments in the United States. You are not taxed on income made outside the United States
             unless you overstay your visit. If you overstay your visit you can become classified as a "Tax Resident"
             which can result in all of your income from all sources worldwide being subject to U.S. tax. You are
             considered to be a U.S. resident for tax purposes if you meet the substantial presence test for the
             calendar year of your visit. Therefore it is essential that you keep track of the number of days spent in the
             United States each year.    

 
             However, there are exemptions to the specific time limits on stays for medical conditions and when you
             have specific connections to another country. You should consult an accountant (CPA) who specializes in
             these matters to find out about U.S. taxation law. Information can also be obtained from an immigration
             attorney or at a U.S. Embassy or Consulate.

             Most probably you won't be eligible to receive a U.S. Social Security Number (SSN), which is also a U.S.
             citizen's Taxpayer Identification Number (TIN). Instead you are required to obtain an Individual Taxpayer
             Identification Number (ITIN).  A ITIN can be issued by the Internal Revenue Service (IRS) or by a Certified
             Professional Accountant (CPA) approved by the IRS.  You will have to fill out a Form W-7 (in English
             language) or a Form W-7(SP) (in Spanish language) in order to request your ITIN.  On the W-7 form you
             will be required to give a valid reason for your application.
   
      3.   Reporting and Compliance: If you have income from any source in the United States, including real
            estate, you are required to file a federal income tax return for the year in which your income was received.
            Also, some states and cities collect income tax and require a return to be filed.

            The federal government also requires all foreign buyers of agricultural land to report their purchase within
            45 days of closing the transaction. 

            There are other laws that may pertain to your particular situation so it is always important to consult with
            the appropriate professionals and government agency officials before entering into a contract to buy or
            sell real estate in the United States.


Transaction Requirements
 
         1.  Buying with Cash Brought into the United States:  Although cash or its equivalent is almost always
              acceptable, there can be issues concerning the amount, its transfer into the United States, and how
              it was obtained.

              U.S. law provides that all cash transactions over $10,000 be reported to the federal government. The
              requirement for reporting involves everyone connected to the transaction including real estate agents
              and brokers, attorneys (lawyers), title companies, closing agents, and lenders. They may want to know
              how you earned the money and where it comes from in order to determine that it was legally obtained.

              If you finance your real estate or business purchase with a loan from a foreign lender (bank or private) it
              might be considered a cash transaction because the loan is closed overseas before the property closing.
              Then the borrowed money is transferred into the United States to be available for the property purchase
              closing.

         2.  Financing and Credit for Foreign Buyers:  Foreign buyers of real estate in the United States have the
              option of taking out a loan to make a real estate purchase. In rising real estate markets and usual
              economic conditions, there are numerous lenders (banks and mortgage brokers) that will lend money to
              non-United States citizens to buy real estate. In times of crisis or unusual economic conditions many of
              these funding sources tighten up and restrict or discontinue such loans.

NOTE:  At this time in 2011 financing in the United States is very tight and difficult to get Lender programs for foreigners are hard to find. There are a few "asset lenders" and "private money lenders" who still make loans to non-U.S. citizens for property in the United States, but their interest rates are high and terms are restrictive. So you should try to obtain funding in your country with a lender who is willing to work with you. Then make arrangements to transfer and "season" the money by keeping it in a U.S. account for a specified length of time,  then you can pay cash for your real estate purchase.

It is important that you line up financing BEFORE placing an offer on property to make sure that your loan can be approved and funded before the contract period expires. Each lender will have their particular requirements, application forms, and timing for approval. Most lenders will have different loan programs to choose from depending on your qualifications, the amount to be borrowed, and the terms of the loan. Interest rates, down payments, fees, and credit standards can vary greatly among lenders so it pays to shop for the best loan.

Foreign buyers who have no established credit history in the United States won't be known to the three credit scoring services: Equifax, Experian, and Trans-Union. Without a credit score most lenders won't be able to process your loan, so alternative forms of credit will be needed to prove that you are a good risk. Alternative credit can be letters or statements from previous lenders or other providers of services stating that you have a history of making monthly payments on-time and paying off loan balances when due. Letters or statements can be from banks, other types of lenders, utility companies, telephone companies, cable television providers, retail stores, or any place that you bought a product or used a service in advance of paying for it.

Most United States based lenders will also want to have proof of your income and ability to make payments on the loan. Salary or wage statements from an employer for the current year, income tax returns for the previous 2 or 3 years, and proof of stock dividends or interest earnings will be requested.

Almost all banks and other lenders will require that the money (funds) you use for your down payment and closing costs be deposited in a United States bank for a specified length of time.  This is known as "seasoning the money." If your money is not deposited in the lender's account they will ask for proof, in the form of bank statements, from the other bank where the money is located. Sometimes it takes a few weeks to get this verification of deposit. It is not unusual for a lender to require that your funds be seasoned for 2 to 3 months. 

An appraisal of the property you are purchasing will be required by the lender to make sure that the real estate or business is worth more than the amount you are borrowing.The past and existing  title (ownership) will also be investigated to find out if there are any liens or claims against the property. In the case of real estate purchases an up-to-date survey of the property will also required.

          3.  Escrow Account for Property Taxes and Insurance:  If your down payment for the purchase of a home is
               not over 20% of the purchase price your lender will almost always require you to have an escrow
               account. Along with your monthly payment of principal and interest on your loan, you will pay 1/12
               (one-twelfth) of the yearly (annual) cost of property taxes and homeowner's insurance. his account will
               accumulate the tax and insurance payments until the end of the year when the lender will forward the full
               payments to the appropriate local tax collector and your insurance company.

Also, a lender may require a monthly payment of Private Mortgage Insurance (PMI) if your down payment is less than 20% of the purchase price.  In case of a land purchase, no insurance will be necessary unless there is a liability risk.

If you buy a condominium, the exterior building maintenance and insurance is included in the monthly association fee.  It is still wise to purchase liability insurance and personal property insurance to cover the interior and your personal possessions.

 Contact us to purchase a property on Cape Cod, Nantucket or Martha's Vineyard.