For the first part, see my post of 12/5/14.
Here are some additional thoughts/concerns to be aware of:
• I can’t emphasize enough the importance of understanding the market. Many buyers from outside the US do not realize how competitive the current market is, that it is a seller’s market, and that there are likely to be multiple bids on any property that is priced to sell, usually going above the asking price. Bidding low in hope of getting a “deal” does not work. There is little room to bargain back and forth when sellers have several offers to choose from. You need to discuss this with your agent and trust the advice you get.
• Be aware that there are tax concerns and get advice from an attorney and accountant in New York as to how to minimize these while you own and when you eventually sell, or if you or a co-owner should die. If the property is an investment and you receive rental income, you will generally have to file federal and state tax returns, and pay tax on any profit. In case of death, there are high estate taxes on foreign investors, which can be avoided by transferring the property into an entity other than an individual or partners.
•Setting up the entity into which the property can be transferred takes a month or two, typically. If you are certain you will be purchasing, it may make sense to create the entity prior to shopping for the property. If not, it is best to wait until the property is in your name and then go through the process of creating the entity and transferring the property into it. Sellers will not want to wait for you to do this between entering into contract and closing the sale.
• When you sell the property you will be subject to a tax under FIRPTA, the Foreign Investment in Real Property Tax Act. This tax will be withheld at the closing, but is usually refundable as long as you have complied with tax regulations while owning the property.
• Opening a bank account in the US should be done before making purchase offers, as you will need to pay ten percent of the purchase price when you sign a contract. You must then be prepared to transfer funds into this account to complete the purchase and to receive and issue funds while you own the property.
My company, Wohlfarth & Associates, represents buyers and sellers not only in New York City, but also in the Hamptons, Fire Island, the Hudson Valley and coastal Maine. We are very active in numerous international real estate associations. I can provide referrals to attorneys, lenders, and securities firms who have extensive experience dealing with the international community.
I am always happy to answer questions regarding the above.
Robert P. Rems
Licensed Associate RE Broker
Wohlfarth & Associates Real Estate
890 West End Avenue, Suite 1F
New York, NY 10025
Office: (212) 666-1600 X27
Cell: (347) 263-0203
My web page: http://www.wohlfarth.com/agent/robert-rems-29.html