International buyers are flocking to the U.S. real estate market in greater numbers than ever before.
According to the latest report from the National Association of Realtors, real estate sales to international clients totaled $92.2 billion in 2014 (up from $68.2 billion for the previous year). Of the $92.2 billion in sales, nearly half — $45.5 billion — was to non-resident aliens.*
The average price they pay for real estate is generally higher by nearly $150,000 than the average price paid by U.S. buyers, i.e., $396,000 vs. $247,000.*
And, while a majority of these purchases were made in five top states (Arizona, California, Florida, New York and Texas), there is international activity throughout the country.*
But there are some important financial considerations international buyers should be aware of when owning U.S. property.
U.S. real estate has some key advantages for international purchasers
The attraction for an international client to own U.S. real estate is basically three-fold:
- The U.S. has a stable political and economic environment;
- Unlike many other countries, non-U.S. citizens can hold the title to and own the property outright; and
- Property values are in U.S. dollars, which continue to hold strong against other currencies.
However, clients may face estate tax liabilities to owning U.S. property if the owner is a non-resident alien (maintains a primary residency in another country and does not have a Green Card). Unfortunately, many international clients are not aware of these issues.
Three insights for helping a non-resident client avoid financial pitfalls