In New York, it is not uncommon for non-United States citizens to purchase a property. Some people are looking to buy a temporary home. Some have children studying in New York and want to help their children find jobs here after graduation, while others may simply see homeownership in New York as a good investment opportunity. Regardless of the reason, there are five things to keep in mind when purchasing a property in the United States.
1. Hire a professional lawyer
A qualified attorney will want to discuss the transaction with you in person, including the process, inspecting contracts, performing due diligence on the property as well as reviewing the transfer fees. While you may not be able to stay in the U.S. for an extended period of time, taking the time to understand how the transaction works and communicating with your attorney is very important.
2. Sign the power of attorney
It is a good idea to sign a power of attorney with your attorney when you meet with him or her. This way, if you are unable to travel to the U.S. to complete the transfer in person, there is no delay in the transaction process because your attorney can represent the You handle the transfer of ownership. The only exception is when you are purchasing in the name of an entity (such as an LLC or a business). In that case, the entity must appoint another person to act as its agent to sign the transfer document, and it must do so in writing.
3. Property transaction process and time required
It usually takes 30-60 days to go through the buying and selling process. The real estate transaction process in New York is very complex and often involves not only the buyer and seller but also the condominium building itself (as well as the related condo or co-op). For example, the condo will require the buyer to submit an application for approval prior to the transfer. This approval process can take up to 30 days. In addition, the buyer is required to purchase title insurance. Underwriting title insurance companies are also required to perform their own due diligence on the parties to the transaction and the apartment building.
4. Consult a tax person before selling your home
Selling a property creates a tax obligation. It is a good idea to consult a tax professional before selling your property in New York. They will advise you on tax avoidance through 1031 tax deferral provisions and other methods.
5. The Foreign Investment Property Tax Act
In addition, as a non-U.S. citizen, you are required to comply with the Foreign Investment in Real Estate Tax Act (FIRPTA). FIRPTA applies when the seller is a non-U.S. citizen or resident and, in some cases, the buyer must be taxed at 10% of the sale price at the time of the closing. An experienced attorney will advise you of the applicability of this tax requirement to your situation and, if applicable, assist you in applying for an IRS tax withholding certificate.
(Original article by Kai's partner Christine Wong)
This article is contributed by Juwai Columnist Kai Wong .