There are several things Thai investors need to be aware of when considering purchasing a house or condominium in the United States.
The buying process is relatively straightforward and Thais can own property in the US, however there are a number of tax implications that need further investigation.
Compared to Thailand, the US is huge and each state has its own regulations with regards to real estate ownership.
The housing market is extremely foreigner friendly and, unlike at home where there are rafts of restrictions on foreign property ownership, the US government does not have restrictions or hidden fees, such as extra stamp duties, to non-citizens seeking a home or investment in the country.
In some instances, it is also possible to get a mortgage from US lenders for your property purchase. These are often referred to as Foreign Investment Loans, or a FIL mortgage.
International buyers are offered up to 50% of the sale price but there are some basic requirements.
These will depend on the lender but may include an active account in the US with a minimum balance or working income, or disclosure of the source of the funds.
The application process can also be lengthy, so be mindful of that.
If buying in cash, you will need to disclose your identity and source of the funds if coming from offshore accounts. The US has strict anti-money laundering laws and shell companies used to purchase real estate are often scrutinized.
Using an agent is not mandatory in the US, but you may wish to do so to ease the searching process.
Commissions are usually paid by the seller, not the buyer, as is the case in Thailand.
An agent will ask for somewhere in the region of 5-6 percent of the sales price at the time of closing.
Taxes are a huge consideration and can be a minefield so hiring a qualified tax consultant is a must.
Property taxes are inescapable regardless of nationality and annual rates are usually included in mortgage repayments.
Property tax rates vary from state to state so you will need to check where you intend to buy.
US tax returns must be submitted at the end of every year but you can elect to offset expenses against income.
Non-residents will need to apply for an Individual Taxpayer Identification Number (ITIN). This is used to open a US bank account, during the payment process for the property, and for other costs and fees, such as taxes and utilities.
The Internal Revenue Service (IRS) can issue your ITIN.
There are some hefty Estate Taxes in the US, these are often referred to as death taxes. If not pre-planned, there will be a very large tax bill, foreign and US, on the property in the event of the owner’s death.
Using a Foreign Corporation headquartered outside the US to purchase the property may be a way around this, but it is best to use a professional tax advisor.