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The Year of the Investor

By Schlossy     Oct 10, 2007 in Business
I'm a fairly avid Internet user but I still marvel that today's question is from China! From Guangzhou, the City of Five Rams, a potential investor asks: Can I buy U.S. real estate if I am a non-resident alien?
The answer is of course!
Non-resident aliens do face two particular financial wrinkles -- one is the mortgage, the other is taxes.
On the mortgage side, U.S. citizens get mortgages that are linked to their Social Security Numbers. Resident aliens usually get a similar number, called an ITIN (Individual Taxpayer Identification Number) from the IRS. A resident alien who wants to buy a home will get a mortgage tied to their ITIN.
There must be a lot of these people because it seems like every fourth Manhattan condo is being bought by someone who is a citizen of some far-flung part of the world. I am a fairly new agent and I have already had clients from overseas.
The tax wrinkle is that if you're a foreigner, when you sell, the IRS is going to automatically withhold part of your proceeds. They do this under a law called FIRPTA (Foreign Investment and Real Property Tax Act). The law is pretty complicated -- the part a potential investor needs to know is that the government is going to make sure that taxes are paid by scooping up some cash from the closing table.
But that maybe the way it works in China too. I am sure that in the respect of making sure they receive the taxes owed to them, governments are more alike than they are different!
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