Rules & Restrictions For Investing In Real Estate In The US

Indians have long been interested in investing in real estate in the United States. While any non-US person, regardless of citizenship, can purchase property in the US, it is critical to grasp the legal and tax rules before taking the plunge. explains the rules and restrictions for investing in real estate in the United States.

The United States has traditionally been a sought-after destination for Indians. It not only permits Indians to work and engage in commerce and business, but it also allows them to invest in the real estate market. Any individual of Indian descent can buy a home in the United States since homeownership in the United States is not reliant on the buyer’s immigration status. Furthermore, if the foreigners satisfy certain standards, they may be eligible for a mortgage. However, taxation in the United States is more difficult for expats than for US residents. However, before we get into the rules and restrictions for investing in US real estate, let’s have a look at the many incentives that motivate ultra-rich Indians to do so.


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Why do Indians prefer to invest in real estate in the United States?


  • The majority of Indians who have moved overseas regard purchasing a home for personal use as a more cost-effective option than paying rent.
  • Because typical property values in the United States have nearly quadrupled in the previous decade, a strong Return on Investment (ROI) is a driving force.
  • A higher quality of life that comes with owning
  • Mortgages that are simple, accessible, and reasonable if you have established US credit



Rules and restrictions for investing in real estate in the United States

If you are an Indian and fit under one of the following categories of immigrants, you can invest in real estate in the United States.


  • Newcomer to the United States from India on an H1B, L1, F1, or J1 visa with no US credit history
  • Resident Indian foreign national on visa (H1B/L1) with an established US credit history
  • Indian-born, US Green Card holder, or Naturalized citizen


Taxation in the United States

Before investing in international real estate, it is critical to understand American tax rules. It saves a lot of time, money, and difficulty.


Annual income tax returns

Annual tax returns are required for all US property owners, including overseas investors. The Internal Revenue Service (IRS) is the platform via which a foreign property owner may file these forms. It provides different tax breaks and incentives to property investors in the United States.


The federal income tax

The federal tax is commonly referred to as the Estate Tax or the Death Tax. When an individual, whether a citizen or a foreigner, owns an estate in the United States, the IRS taxes them at 46% of the estate’s value. For international property buyers, however, there is an overall exemption of USD 60,000.


Capital Gains Taxation


Profits made from selling real estate property soon after obtaining it are taxed. While most people engage in real estate for the long term, it is critical to consider capital gains tax if the property is sold within a year.


Options for financing

Foreign nationals have various choices for financing a property in the United States.


Financing from a bank

Financing through an American financial institution might be difficult. If you are able to obtain finance from a bank, it will most likely be for a shorter period of time. Furthermore, in the United States, interest rates are often floating rather than fixed.

Even if you are not a resident or a citizen, you can create a bank account. You will simply need a passport and a valid US address for this.


Investing In Real Estate In The US: Corporate checking account

Opening a business bank account or creating a US corporation is one of the most realistic options for assisting with the property purchase process. This allows one to obtain an Employer Identification Number (EIN) as well as a variety of banking choices.


Investing In Real Estate In The US: Obtaining a loan

If you are a non-resident foreign buyer, getting a loan from a mortgage lender is not an option. However, if you have a Green Card or a valid work visa, applying for a mortgage becomes easier. In addition, financial organisations may conduct an overseas credit check to determine your financial creditworthiness.


Investing In Real Estate In The US: 515 IRS Publication

If you are a foreigner trying to acquire property in the United States, IRS Publication 515 summarises all of the Non-Resident Aliens regulations (NRA).


Investing In Real Estate In The US: Taxation rates

The revenue generated by a real estate property owned by an NRA who is not effectively engaged with any US firm is taxed at 30%.


Choose how your rental revenue is taxed.

If you own property in the United States for the purpose of earning money, you can opt to consider it as income from a trade or company in the United States. Once you’ve made your decision, only your net income is tax, and you may deduct the remainder.


Make the decision to save a lot of money.

To save money on taxes, simply make a Section 871(d) election. The election has a significant impact. For example, if the gross revenue from a rental property is USD 30,000, the income tax would be about USD 10,000 (charged at 30% of) if the election is not made. Deductions such as mortgage interest and property tax, among others, lower taxable income with the election, and the tax due is 30% of the net amount.


Investing In Real Estate In The US: 1040 NR

If the NRA makes the 871(d) choice, it is require to file the 1040 NR tax return on time to report real estate revenue and any related withholding. Foreigners must get a US Taxpayer Identification Number in order to file a tax return (USTIN).


Things to consider when purchasing a home in the United States

  • Decide where you want to buy a home in the United States.
  • Find a real estate agent that is skille in international real estate transactions, preferably a Certified International Property Specialist (CIPS). Hire a real estate agent and begin your house hunt.
  • Make an offer on the property you want and see it through
  • Conduct a house inspection
  • Sign a purchase agreement with the seller
  • Finish the Title report
  • Ensure that all original property documentation are in place.
  • Foreign nationals can get house finance through a US mortgage. Put the property in your name.


Florida, California, and Texas are the most popular areas in America for consumers to acquire residential real estate. While the location is affecte by a variety of factors. California has consistently ranked first among Indian purchasers, with over 40% preferring to invest in real estate here. This is due to the fact that the majority of Indians want to work and reside in the Silicon Valley area. As a result, if you intend to invest in US real estate, you may make the most of it by staying informed about real estate rules and taxes charges.


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