Can an Indian Buy Property in USA?

Homeownership is often touted as a key part of the American Dream, but can an Indian purchase a property in the USA? This article will provide a comprehensive overview of the legal considerations and financial requirements for foreign nationals from India interested in purchasing property in the United States. Additionally, we will address the specifics concerning an Indian citizen’s ability to purchase property in the United States. It will explore relevant laws, regulations, and procedures that may need to be followed for such a transaction. Let’s learn about Can an Indian Buy Property in USA.

Who Can Buy a Property in the USA?

So, are you thinking about how to invest in property in the USA without carrying a green card, or citizenship of the country? Look no further; your answer is right here.

As a buyer, you do not need to carry a green card or be a citizen of the States to be able to invest in US real estate. Anyone securing an Individual Taxpayer Identification Number, an alternative to Social Security Number for foreigners, can invest their valuable money in real estate in the States. To obtain this number, you must apply to the Internal Revenue Service.

Under IRS Publication 515 for Non-Resident Alien (NRA), a foreigner with any country citizenship willing to buy a property in the USA can buy one. And if you are an Indian, below are the immigration categories that can get you a property in the country:

• Born in India or is a Green Card holder
• You are an Indian resident with a foreign national visa of L1 or H1B with either established or no established USA credit history
• Indian newcomer to the USA with a J1, F1, L1, H1B, or other types of visa with no established credit

How to Finance Real Estate in the USA Without Being a Citizen of the Country?

Investing in the USA real estate is one of the most fruitful investments for foreigners. Every year, investors, especially foreign investors, in this sector in the country have increased. According to the National Association of Realtors, the 2022 International Transactions in US Residential Real Estate figure showed that Indian investors are among the top foreign buyers in USA real estate, comprising 5% ($3.6B value).

But as an investor in this sector, do you have questions about financing that purchase? Well, here’s how you can do it:

1. Make a Cash Purchase: You can make a simple cash purchase if you have enough money in your bank account to purchase the property outright. This can be possible by taking money from your family through an international money transfer.
2. Get Private Lenders: You can always contact private lenders to help finance your real estate investment in the USA as a foreigner. But before you approach them, you need to remember that they offer high-interest rates, and their loan terms may also be less favourable. So, research before making a decision.
3. Try Traditional Mortgages: There are also private lenders in the United States to provide you with mortgages, but their terms and conditions are more stringent. You might even have to hold the best credit score, provide a higher down payment, and tick other strict criteria before getting a mortgage. So, shop around before going after one lender to find the terms and conditions best suit you.

What are the Tax Implications to Buy Property in the USA as a foreigner?

While you can sit assured that your answer to the question of can an Indian buy property in the USA is positive, you must remember that investing in real estate as a foreigner in the United States comes with several taxes. You need to comply with them in order to save your money and time.

Here are some taxes you are subjected to when investing in USA real estate:

1. Annual Tax Returns: Anyone owning a property in the USA, whether a citizen or a foreigner, must file their annual tax returns every year. By filing your taxes, you can also gain tax benefits and deductions. IRS (Internal Revenue System) is your platform to file the annual tax return as a foreign investor.
2. Federal Tax: Also known as the Death Tax or Estate Tax, the Federal Tax is where the IRS charges a real estate investor, foreigner or citizen 46% of their property’s worth. It also includes an exemption of $60,000 for foreign buyers.
3. Capital Gains Tax: Buying a property in the USA also comes with the Capital Gains Tax, which implies the tax on the profits earned by selling the property post-purchase. If you are considering selling your US property in a year, keep the Capital Gains Tax in mind.

How Can Indians Buy Property in the USA?

Here are some points to consider before investing in real estate:

1. Finalise the location: The first step is to decide on a location in the US where you want to purchase land.
2. Find an agent: It’s essential to find an experienced real estate agent who deals with international property transactions. A Certified International Property Specialist (CIPS) is preferred.
3. Understand the cross-border tax: This step is important when buying a property in the USA as you want to know the cross-border tax situation to avoid penalties or delays.
4. Begin the home search process: Once you are well-versed with the taxes and everything legal, it’s time to hire a good international real estate agent and begin your property search process.
5. Make an offer: If you find a property you like, it’s time to make an offer that satisfies both parties and finalise the deal.
6. Carry home inspection: After making the offer, it’s time to conduct a home inspection. This allows you to spot any significant problems with the house before you close the deal with the owner.
7. Sign the contract: Once you have completed the home inspection and found everything to be perfectly alright, sign the contract to seal the deal.
8. Get the title report: This document is important to procure as it holds the legal status of the land or property you will purchase and everything else that includes the ownership details.
9. Ensure the original papers are there: Original property papers are required when processing your loan if you want to buy a property in the USA. Make sure the homeowners have the original paper with them before selling.
10. Obtain financing: It’s better to get your home financing from a US mortgage option that assists foreign nationals in buying homes in the country.
11. Register in your name: This final step includes registering the property in your name from the owner.

Conclusion

It’s important to understand the law and follow the regulations imposed on foreigners who invest in the USA real estate. Keep tabs on the taxes and other necessary things required for carrying out transactions in the country’s real estate.

FAQs

1. Can an Indian Buy a Property in the USA?
   Yes, as a citizen of India, you can buy a property in the United States, but there are several restrictions and certain requirements for that to happen.
2. Can Indians get a mortgage to buy property in the USA?
   If you meet the credit score requirement, lender’s eligibility criteria, and other aspects, you can get a mortgage to buy property.
3. Can Indians buy property in the USA as an investment?
   Yes, as long as you comply with the regulations and laws governing the United States, you can invest in the USA real estate.
4. Are there any tax implications for Indians buying property in the USA?
   Yes. Some common taxes you must take care of before buying property in the USA are annual returns, capital gains, and federal tax.
5. What are the benefits of Indians buying property in the USA?
   While taxes and regulations are imposed on property investment in the USA for foreigners, buying real estate over there comes with added benefits of property value appreciation, rental income, and portfolio diversification. Further, not guaranteed, but you may also be eligible for a USA visa application based on your investment.
6. Can Indians buy commercial property in the USA?
   Subject to US laws and regulations, you can buy commercial property in the United States if you abide by them.
7. Do Indians need a US-based agent or attorney to buy property in the USA?
   Although it is recommended to get help from a local attorney to make you comply with the regulations and laws of the United States, it’s not mandatory to have an agent.