How Foreigners Can Invest in US Real Estate
One question I receive regularly from international readers: can foreigners invest in US real estate? The short answer is yes, and there are good reasons to consider it. The US offers stable property rights, transparent markets, rental yields that beat most developed countries, and no restrictions on foreign ownership (unlike Canada, Australia, or Singapore). For those willing to invest $800,000+, real estate can even be a path to permanent residency through the EB-5 visa program.
That said, "can" doesn't mean "easy." Foreign investors face unique challenges around financing, taxes, and property management that domestic investors don't worry about. After helping several international investors navigate this process, here's what you need to know.
Important disclaimer: This article is for educational purposes only. International tax and real estate law is complex and varies by country. Consult qualified legal and tax professionals in both your home country and the US before making any investment decisions.
Yes, Foreigners Can Own US Real Estate
There is no federal law prohibiting non-US citizens or non-residents from buying property in the United States. You can be a citizen of any country, have never set foot in America, and still purchase a home, apartment building, or commercial property. You don't need a visa, green card, or social security number to own real estate (though you will need an ITIN for tax purposes).
A few states have restrictions on foreign ownership of agricultural land, and some HOAs have residency requirements, but for typical residential and commercial investment properties, there are no meaningful restrictions.
The Financing Challenge
This is where things get difficult. While foreigners can buy property, getting a mortgage is another matter entirely. Most US lenders require borrowers to have a social security number, US credit history, and sometimes US-based income. None of which foreign investors have.
Your options for financing:
Cash purchases. The simplest solution. No lender approval needed. Many international investors, especially from countries with high savings rates or real estate wealth (China, Canada, UK), purchase US properties outright with cash. The obvious downside is that you lose the leverage advantage that makes real estate investing so powerful.
Foreign national loans. A small number of lenders specialize in loans to non-US residents. These loans exist but come with harsher terms: 30-40% down payments, higher interest rates (often 2-3% above standard rates), and shorter amortization periods. The lenders are taking on more risk and they price accordingly.
Portfolio lenders and DSCR loans. Some portfolio lenders and DSCR (Debt Service Coverage Ratio) lenders will work with foreign nationals. DSCR loans underwrite based on the property's income rather than the borrower's personal finances, which sidesteps the credit history issue. Expect 25-30% down and rates 1-2% above market.
Cross-border banking relationships. If you have a banking relationship in your home country that also operates in the US (HSBC, Citibank, etc.), they may offer mortgage products for their international clients. Terms vary widely.
The Tax Implications
Foreign investors face several tax considerations that US investors don't:
FIRPTA (Foreign Investment in Real Property Tax Act). When a foreign person sells US real estate, the buyer is required to withhold 15% of the gross sale price and remit it to the IRS. This isn't an extra tax; it's a withholding against your actual tax liability. If your actual capital gains tax is less than 15% of the sale price, you'll get a refund when you file your tax return. But it means 15% of your sale proceeds are tied up until you file.
Rental income taxation. Foreign investors can choose to be taxed on rental income in one of two ways. Without making an election, rental income is taxed at 30% of gross rents with no deductions allowed. This is almost always a bad deal. By filing a tax return and making a "net basis" election, you're taxed on net income after expenses at graduated rates, same as US investors. The net basis election is almost always better, but it requires filing US tax returns annually.
Estate tax exposure. US estate tax applies to foreign nationals owning US property. The exemption for non-residents is only $60,000 (compared to $12+ million for US citizens). If you die owning substantial US real estate, your heirs could face estate taxes of 40% on the value above $60,000. This is why most sophisticated foreign investors hold US property through proper entity structures.
Entity Structuring for Foreign Investors
Most tax advisors recommend foreign investors hold US real estate through a blocker structure, typically involving:
A foreign corporation owned by the investor, which owns a US LLC, which owns the property. The foreign corporation "blocks" the estate tax issue because the foreign investor doesn't directly own US property. The US LLC provides liability protection and pass-through taxation.
This is complex, requires professional setup, and has ongoing compliance costs. But for investments over $500,000, the estate tax protection alone is worth it. Consult a tax attorney experienced with international real estate before purchasing.
Country-Specific Nuances
Different countries have different quirks when investing in US real estate:
Canada. Canadians are the largest group of foreign real estate investors in the US. The US-Canada tax treaty provides some relief from double taxation. Many Canadians already have US credit history from cross-border banking relationships. Financing is relatively easier for Canadians than other nationalities.
China. Chinese investors have historically been major buyers of US property, but capital controls make it difficult to move money out of China. The official limit is $50,000 per person per year. Many Chinese investors use extended family networks to aggregate capital or purchase through businesses that have offshore accounts. Recent years have seen crackdowns on these channels.
Mexico. Mexican citizens face no special restrictions and many border-state lenders have experience with Mexican buyers. Some offer peso-denominated payments. The US-Mexico tax treaty is less favorable than the Canadian one, so tax planning is important.
UK and EU. European investors generally have fewer restrictions on capital movement. The strong dollar makes US property relatively expensive for euro and pound buyers, but also means a weaker dollar in the future could provide currency gains on top of property appreciation.
India. Indian investors face Reserve Bank of India restrictions on outbound investment, though the Liberalised Remittance Scheme allows up to $250,000 per year for overseas investments. Many Indian investors accumulate capital over multiple years or invest through NRI accounts. The US-India tax treaty provides some relief on rental income taxation.
Middle East (UAE, Saudi Arabia, etc.). Gulf investors often have fewer capital movement restrictions and substantial liquidity. Many prefer cash purchases for speed and simplicity. Islamic finance principles may require specific structuring to avoid interest-bearing loans.
Property Management from Abroad
Even if you navigate financing and taxes, you still need to manage property from thousands of miles away. Remote landlording is possible but requires systems:
Hire a professional property manager. This isn't optional for foreign investors. Budget 8-12% of gross rent for management fees. Interview multiple companies, check references, and verify they have experience with out-of-area investors.
Visit annually if possible. Even with a property manager, an annual inspection helps catch issues the manager might miss or minimize.
Build a local team. Beyond the property manager, you need relationships with a real estate attorney, CPA experienced with foreign investors, and possibly a mortgage broker for future acquisitions.
Use technology. Modern property management software, video calls for inspections, electronic payments, and digital document signing make remote ownership feasible in ways it wasn't a decade ago.
Is It Worth It?
Foreign investment in US real estate is absolutely viable. The US offers stable property rights, transparent markets, potential for appreciation, and rental yields that exceed many international markets. But the complexity of financing, taxes, and remote management mean it's not for beginners.
If you're an international investor considering US real estate:
- Start with substantial capital to offset financing limitations
- Hire professional help for entity structuring and tax compliance
- Budget for property management from day one
- Focus on stable markets with strong property management infrastructure
- Plan for a multi-year hold to offset transaction costs
The US real estate market is open to the world. But foreign investors who succeed here treat it as a serious business, not a casual investment.