Open to buy, taxed to sell
Real Estate & Property in the United States
Foreign buyers can acquire US property freely. The complication arrives when you sell it.
GCC business setup specialists
Disposal withholding is the thing to plan for
There is no general restriction on foreign ownership of US real estate. What applies instead is a withholding regime on disposals by foreign persons: a percentage of the gross sale price is withheld at closing and remitted, regardless of whether you made a gain. Reducing or recovering it requires advance steps. A growing number of states have also restricted purchases of agricultural land by certain foreign buyers.
- Disposal withholding planned for at purchase, not at sale
- Holding structure chosen on your actual purpose
- State-level restrictions on land type checked
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What applies
The position for a foreign buyer
Buying is open; selling and holding carry rules.
| Element | Position |
|---|---|
| Foreign ownership restriction | None generally. |
| Disposal withholding | Applies on sale by a foreign person. |
| Rental income | Taxable; state filings may also apply. |
| Property tax | Levied locally, annually. |
| Transfer taxes | State and local, on purchase or sale. |
| Agricultural land | Restricted in a growing number of states. |
Withholding rates and reduction procedures, state transfer taxes, local property taxes and state restrictions on agricultural land are set by federal, state and local authorities and change. Tax questions require a US tax adviser. We handle US formation and compliance set-up and co-ordinate with US tax, regulatory or litigation counsel where advice is needed. We do not give US tax or legal advice.
How it works
Buying and holding US property
Plan the exit before you buy.
01
Settle the structure
Whether to hold personally or through an entity, with the income tax, withholding and estate consequences of each set out by a US tax adviser.
02
Acquire
Entity formed where used, tax identification obtained, and the purchase completed with title and closing agents.
03
Hold and report
Rental income reporting arranged, local property taxes diarised, and the disposal withholding position understood well before any sale.
- The property and its location
- Whether it is residential, commercial or agricultural
- Purchase price
- Whether the buyer is an individual or entity
- Where the buyer is resident
- Intended use — occupation, letting or development
- Whether financing is involved
- Whether you own other US property
- Whether an eventual sale is contemplated
- Whether rental income is expected
- Whether estate planning matters to you
- Whether a transaction is already under offer
Scope
What is included, and what is not
Stated plainly, so nothing is added once the engagement starts.
Included in the service fee
- Holding structure options with the consequences set out
- Entity formation where used
- Tax identification number applications
- Co-ordination with title and closing agents
- Rental income reporting set up
- Disposal withholding position explained in advance
- State land restriction check
- Co-ordination with a US tax adviser
Not included, quoted separately
- Purchase price and transfer taxes
- Title, escrow and closing costs
- US tax advice and withholding certificates
- Valuations and surveys
- Mortgage and finance arrangement
- Property management and letting
- Estate agency services
- Local property taxes
Verify independently
Relevant US authorities
We file directly with these bodies on your behalf.
US Customs and Border ProtectionFederal Trade CommissionOccupational Safety and Health AdministrationState alcoholic beverage control boardsCounty assessors and recordersState attorneys general
Questions
US property for foreign owners — FAQs
Can a foreign person buy US property?
Yes, generally without restriction. The United States is unusually open on this compared with most jurisdictions we work in.
What is the disposal withholding?
A percentage of the gross sale price withheld at closing when a foreign person sells US real property, remitted regardless of whether there is a gain. Reducing it requires steps taken in advance.
Should I buy personally or through an entity?
It depends on your purpose, number of properties and estate planning position, and the trade-offs are genuine. It is a question to settle with a US tax adviser before you buy.
Is rental income taxable?
Yes, with federal and often state filings. How it is taxed depends on elections made, which is another reason to settle the structure early.
Are there restrictions on farmland?
A growing number of states restrict acquisition of agricultural land by certain foreign buyers. If agricultural land is involved, we check the specific state position.
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