Sotheby's International Realty Donna Stockman

Foreign Citizens

New York City real estate is becoming increasingly popular with international buyers, and an increasing percentage of real estate transactions in New York City involve non US citizens. NYC is friendly to foreign investors, and while the purchasing process is similar for both US citizens and non US citizens, there are special considerations for foreign investors.

Empire State Building in New York City -Buyer Broker Donna Stockman

The first thing you need to do before embarking on this process is to consult with a lawyer and a tax accountant who will advise you about the special tax and legal considerations for foreign purchasers. Among other things, they will advise you about the best way to purchase a property. If you do not have advisors in the US, I can provide referrals.

Since much of the process is the same whether you are a US or non US citizen, you should familiarize yourself the information under the “For Purchasers” tab, including Forms of Ownership, The Purchase Process, Coop Board Approval, Neighborhoods, Why Do I Need a Broker?, and What You Should Expect From Your Broker.

While it is possible for foreign citizens to purchase in a cooperative, it is more challenging and would require, among other things, having US accounts with liquid assets, a US credit rating, US tax returns and excellent references, although boards consider each person on a case by case basis. You must rely on my guidance as your broker. If you have a green card or a work visa, this is of course helpful.

There are advantages to coops as outlined elsewhere on this website. Since about 70-75% of the property in New York is cooperative, there is more inventory of coops than there is of condos, and prices tend to be 10-20% lower. Further, coops tend to be desirable as a residence, since the building is mostly owner occupied and not transient. However, coops are not as liquid as condos since the approval process can be difficult and take months.

Most recent construction and conversions of existing rental buildings since the 1980s has been condominium ownership. Condos represent about 25% of NYC real estate. New condos have the latest modern conveniences and services and have luxury finishes. Condos are becoming increasingly popular with US residents and foreign buyers. While more expensive than coops, condos are attractive because the purchase and sale process is faster and easier, ownership is less restrictive and they can be purchased as an investment property. Another advantage of owning a condo is that it can be purchased in a company or business name, through a trust or through a LLC (Limited Liability Company). Tax considerations for foreign investors can be complicated due to tax treaties and other issues, and foreign buyers should consult a tax adviser specializing in international tax law.

Closing costs and ownership costs (maintenance, common charges and /or real estate taxes) are the same for both US and non US citizens (refer to the Closing Cost guidelines under “Resources”).  However, tax treatment will not necessarily be the same. In general, foreigners pay a higher percentage of federal tax on long term investments. And under the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), income tax is withheld immediately after a non-resident sells property and the IRS requires a withholding statement for dispositions of property by non US citizens. Foreign citizens should consult reputable tax, financial and legal advisors whose business specializes in non US citizens. Here is a link to a brief document which outlines some of the considerations for foreign investors:

Foreign Investor Considerations

There are banks that will lend to non US citizens to purchase real estate in the US. Each bank has its own program and most banks restrict the percentage of the purchase price that they will lend. Borrowers may also be required to maintain balances at the bank, and will be required to provide specific documentation which includes at minimum proof that the buyer is allowed to enter the country, credit references and verification of employment, as well as proof of adequate liquidity to pay closing and ongoing costs. Sotheby’s International Realty has a relationship with HSBC, and I can refer you to private bankers and mortgage specialists.

Here are some links to articles of interest:

Links