Can a foreigner buy a house in the US? Federal rules

Is there a federal ban on foreign buyers?

The sources we read describe no general federal ban on a non-citizen or non-resident owning a house, condo or land. Federal rules attach to particular situations instead:

• Taxes when you sell or die owning U.S. property (below).
• Financing rules set by lenders and loan programs (see mortgages for non-residents).
• Security and reporting rules for certain land, described below.
• State law. Each state sets its own property law, and some limit foreign ownership.

What does FIRPTA mean for a foreign owner?

The Foreign Investment in Real Property Tax Act (FIRPTA) taxes a foreign person who disposes of a U.S. real property interest. The IRS says the buyer generally must withhold 15 percent of the amount realized, meaning the price and any debt assumed, not the profit. You do not pay it when you buy; you face it when you sell. The full rules, the exceptions and the forms are in FIRPTA withholding.

Does the U.S. tax a foreign owner’s estate?

Yes, in some cases. The IRS says U.S.-situated assets of a deceased nonresident who was not a citizen, including U.S. real estate, are subject to estate tax. The executor must file Form 706-NA if those assets exceed $60,000 at death. Treaties can change the result. See US estate tax for foreign owners.

Are there places a foreign buyer cannot easily buy?

Three federal and state rules can matter, depending on the property:

1. Near military sites and ports. Treasury’s CFIUS rules define “covered real estate” in 31 CFR 802.211: real estate in or functioning as part of a covered port, or within close proximity of listed military installations or other U.S. government facilities. Foreign-person transactions in those areas can be covered. Check the rule and its appendix before you contract for land near a base.
2. Farmland. Under 7 U.S.C. 3501, a foreign person who acquires or transfers an interest in agricultural land must report to the Secretary of Agriculture within 90 days.
3. Closing reports. FinCEN’s rule at 31 CFR 1031.320 requires closing professionals to report certain non-financed transfers of residential real property to an entity or trust. A purchase in your own name is not that case, but an all-cash purchase through a company or trust may be. Confirm the current compliance date on FinCEN’s site.

Where states differ

State law adds its own limits. Florida’s chapter 692, for example, bars a “foreign principal”, with limited exceptions, from acquiring land on or within 10 miles of a military installation or critical infrastructure facility, and the statute defines that term by reference to named countries of concern (China, Russia, Iran, North Korea, Cuba, Venezuela’s Maduro regime and Syria). Other states have different rules, so read the statute for your state. Costs and procedures also vary: compare transfer tax, property tax and closing costs, then see the page for your state, such as Texas closing costs or Florida closing costs.

What does buying cost?

The price is only part of it. See closing costs explained, the closing costs calculator and the cost of buying a home. For the order of steps, read home buying steps.