The United States is going through the lowest-price points in more than two decades. Real estate prices have clearly dropped dramatically over the last five years. In fact, prices have not been this low since the late 1980s. As an investor in US property, it’s all about the timing, the market, buying low, and selling high; and keeping the property for substantial cash flow in between buying and selling. The United States has affirmed itself as a real estate buyers dream so the opportunities abound throughout the country.
James Bradley – US Invest “talks about how to retire in 7 years with US properties”.
Another reason investment properties in the US are a growing trend is to create wealth for the individual and family via USA real estate investments. This is one of the biggest advantages of “passive-income” as it can be passed down from generation to generation. Leaving an inheritance becomes much simpler if the individual owns various passive-income properties in appreciating markets.
Other signals of the US real estate recovery and why overseas investors are so excited:
- Jobs are coming back, and people are investing in homes and home prices are stabilizing.
- The weak US dollar signifies a couple of opportunities for overseas capital. First, the weak dollar permits more property purchases per foreign currency-unit, and when the dollar bounces back, the investments value increases again, making the property investment doubly appealing to overseas investors.
- It has also been revealed t hat over 25% of all residential property sales in Florida in 2013 were from overseas buyers. South Florida was the first USA market to crash; however, it is South Florida once more who is the leader in the real estate market recovery.
- A surprising winner is the Michigan market in the US. One expert sited that similar to Florida, Michigan is another area of “great opportunities due to cheap prices.”
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- WHAT ABOUT USA INVESTMENT PROPERTIES FOR FOREIGN INVESTORS?
- WHAT IS THE SITUATION FOR US FOREIGN PROPERTY INVESTORS AND TAXES?
- HOW IS IT FOR AUSTRALIAN US PROPERTY INVESTORS?
- The key reasons why Australians are investing in US real estate:
- IS THE RIGHT TIME NOW FOR FOREIGN INVESTMENTS IN US PROPERTY?
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Having only $50,000 to play with, I did not think I would have much hopes of getting an investment property (no way I would get one in Australia). US Invest handled the entire process from start to finish, legal, management, tenancy arrangements, the lot! My rental returns are 14% even in current market (came pre-tenanted). I cannot recommend the team at US Invest high enough! Investors large and small will all be happy!” – Terry G
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WHAT ABOUT USA INVESTMENT PROPERTIES FOR FOREIGN INVESTORS?
Increasingly, international investors are investing their money in to the US property market. Information from real estate experts reveal that in the initial eight-months of 2013, nearly $23 billion poured into the American real estate market from foreign buyers.
In the interim, a survey carried out by the Association of Foreign-Investors in Real Estate recently affirmed the USA has a significant leader in international property investment, with a significant majority of respondents planning to boost their exposure to the market.
This makes the United States real estate an extremely appealing prospect, and it certainly has the possibilities to live up to this idea. Nonetheless, prior to investing in the USA property market, it is crucial to understand the tax conditions.
WHAT IS THE SITUATION FOR US FOREIGN PROPERTY INVESTORS AND TAXES?
Dissimilar to foreign investments in the US stock market, the property investment market for foreign buyers is generally taxable in the United States. The Foreign Investment in Real-Property Tax Act (FIRPTA), was enacted in 1980. This caused international investments to be saddled with a momentous tax liability. Merged with later acts and amendments, this basically means that real estate investments from overseas buyers are handled as (ECI) or Effectively Connected Income.
Rental gains and returns from property sales are typically taxed at the identical rates as US citizens, and foreign buyers must fill out USA tax returns as well. In certain situation, investors in (REITs) or Real Estate Investment Trusts can be subject to comparable tax legislation on capital-gains dividends and stock sales.
Moreover, there may also be supplementary, non-US tax hurdles and responsibilities applying to foreign investors of US property. This will more or less be in relation to the investor’s home jurisdiction and matters like reporting income from US holdings.
HOW IS IT FOR AUSTRALIAN US PROPERTY INVESTORS?
The USA property market is quickly becoming a stirring investment opportunity for many Australian investors. It seems ironic that the present financial atmosphere has created prospects for purchasing properties in the United Sates at prices that many experts believe investors will never see again.
The key reasons why Australians are investing in US real estate:
- Speed up their superannuation
- Priced out of the market in Australia
- Searching for alternative cash flow streams
- Benefits from a favourable exchange rate
- Expand their portfolio
Though many clever investors are conscious of the fact that property investing in the United States offers fantastic opportunity, the prospect of investing overseas is perplexing to many people. In most instances, this confusion comes from not knowing where to begin.
There are a number of Australian companies that also operate in the US with experience working with sizeable institutional-investors along with individual investors who are looking to invest in a clear-cut manner with all aspects of the investment process straight forward and uncomplicated.
However, one must keep in mind, though there can be great opportunities in overseas real estate, there are also potential risks. Whether it is a chalet in Switzerland, or a villa in Portugal, property promoters have their eyes set on Australia’s increasing levels of self-managed superannuation investors. The Internet is rife with opportunities for investments in US properties for Australians interested in the market.
The chief of a technical service of self-managed superannuation funds says that there are various compliance matters when investing overseas that affects Australians investing in the US the same as any other foreign investor. For example, depending on the state a person invests in the United States, a super fund may not be able to own the property outright. This may require the individual to setup a limited-liability company, which the super fund will be the proprietor and will hold the property as well. Additionally, there are limitations on how the company invests in order not to become victim to the “in-house” asset rule. Currency risk may be a factor as well; however, it’s not impossible.
IS THE RIGHT TIME NOW FOR FOREIGN INVESTMENTS IN US PROPERTY?
The general mood in the United States has changed. Real estate investors, consumers, and others are more positive and feel that the property market has turned around for the better. There are people out and about shopping and restaurants are feeling a great resurge in business. The doom and gloom of financial shortages have been left in the past and many experts feel now is the best time to invest in the US property market. The mood of the US has turned for the better, which means that things can only get better all the way round including the US property market.
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