foreigner investing in USA

11 Replies

Hello everyone, I am a new investor who is aspiring for financial freedom, would like to seek for like minded people to start investing in states. So glad to be in bigger pocket community and hoping to achieve more together.

Any idea where is good place to start with a budget not more then $50k?

@Joshua Khoo

I think it will be hard at that budget but certainly see what others think. You need to consider US tax implications as a foreign investor and align yourself with a CPA / tax advisor who can assist with tax filings and ongoing tax planning.

Yes lance is correct. You will need to get an ITIN with a CPA who understands FIRPTA. Also your best bet is to find a real estate investment fund with foreign investors. They aren’t uncommon in Las Vegas. 

From my understanding, foreign investor will be taxed 20% when they sell their properties in the future.  

For an example, you buy the property at $400,000.  Let say your sale price two years later is $430,000. 

Estimate 6% realtor fee and escrow fee to sell the house is about $40,000.  On top of it, foreign investor need to pay an additional of 20% tax to IRS, which is $86,000.  So your net proceed is about $304,000.  ($430,000 sale price - $40,000 escrow transaction fee - $86,000 tax.)

Please correct me if I’m wrong.

hey joshua, welcome to BP, where are you from? im german, living and investing in Las Vegas - i got more and more european friends and family members who are interested to invest their money with us, so doing a lot of reading and analyzing in that regard lately, and there are multiple ways how you can put any amount of money to work -  happy to connect with you if you have any questions! 

Account Closed that is incorrect. The 20% you are referring to is called FIRPTA withholding. This is only a prepayment of tax on the gross sale of the property. At the price range you are talking about then the withholding amount might be able to come down to 10%. When the investor files their tax return for the year they will see most of this money come back as a refund. The gain on the sale of the property is calculated by taking the sales prices less adjusted basis less selling expenses. 

@Charles Carillo

We have been directly invest, purchased the properties under our LLC.

However, recently, we don't look good on the housing market, so we are currently selling all our double digits properties on MLS now.

@Joshua Khoo

Although $50k is a solid amount , it may be difficult to find a property to rent out in that price range that wont come with many tenant management headaches. Usually at that price point you are going to be dealing with low income households and will have issues with collecting rent. 

Many investors with that dollar amount may be better off investing in a fund or partnering up with someone to a better quality deal.  

Best of luck in all your endeavors.