Yes! Foreigners can buy real estate in Texas. Realtors in Temple, TX, can help walk you through your real estate transaction process so that you can feel confident with your purchase. Texas has a real estate market that is open to all purchases. With some exceptions, foreigners can buy any real estate available to U.S. citizens. Buying real estate in Texas can be a profitable investment, so take advantage of this opportunity. Read on to learn about buying a Texas home as an ex-pat.
Buying real estate in Texas
More and more people are moving to Texas from small to large cities because of its unique culture and diverse housing options. Buying real estate can be complex, but Texas has various options for everyone. With the help of thorough research and real estate services from realtors in Texas, you can find the property or home you love. You can choose between lower-quality and higher-quality homes depending on your economic situation. Make sure you are financially prepared before you go shopping. You should also consider home-buying requirements such as down payment, mortgage type, and eligibility requirements. All this should be included in the budget.
Factors Foreign Home Buyers Should Know When Buying Texas Real Estate
Before buying a home in Texas as a foreigner, issues may need to be addressed. Here are some essential items that foreigners need to consider before proceeding with a purchase. To buy real estate or a home in Texas as a foreigner, you must prove your creditworthiness. You will need a Tax Identification Number (TIN) from the Internal Revenue Service (IRS). Getting good credit may be challenging if you are a first-time foreign buyer in the United States.
Real estate agents can help you buy a home with or without a loan. They can also connect you with lenders that offer home loans without U.S. credit. Investment funds and institutional investors will lend money to foreigners. While banks are reluctant to lend to foreigners because the new banking regulations make it very difficult for banks to comply, private loan companies have built a reputation as conventional lenders for buying real estate in Texas. A network of lenders who work with foreigners and offer favorable home loans can help you buy the property you need.
There are also various legal options to consider when purchasing in the United States. If you're purchasing multiple properties, consider an LLC. While not necessary, it does offer additional legal protection. An LLC or limited liability company is a U.S. corporation that reliably protects its owners from liability for their debts or obligations. This type of company combines the characteristics of a legal entity with a partnership or a sole proprietorship. As a foreign buyer, you can choose whether to form an LLC. Texas is a partner real estate state, so that you can buy real estate in your name. For example, if you are married, you may not know that the property you purchased is divided equally 50/50 in ownership, regardless of who is listed on the title deed. The tax consequences vary by state, so consult with your attorneys when forming an LLC. Consultation is essential before forming an LLC, as the tax consequences depend on your situation.
Also, FIRPTA, or the Foreign Investment Property Tax Act of 1980, is a tax law that imposes a tax on the profits of foreigners who sell real estate in the United States. For example, let's say you bought a property for $100. After owning it for a while, you want to sell the same property for $200. In this case, the new buyer must pay 10% of the purchase price, i.e., subtract $20 from the total.
For a non-resident, the IRS requires you to withhold a certain percentage of the sales price when you sell your real estate. However, this is more convenient than it may seem at first glance. The amount requested by the IRS can be held in escrow until the paperwork is completed (usually within 90 days). Second, you must file your taxes with the IRS on time, and you won't run into FIRPTA issues. Over the past decade, the percentage of foreign buyers purchasing homes and real estate in the United States has declined, but Texas remains a destination for many foreign buyers.
Foreign buyers spent $54.4 billion on residential real estate in the United States, down 27% from 2020. Due to the ever-changing political and economic scenario in the United States, foreign purchases in the American housing market have declined in recent years. According to the latest report, investment by foreign buyers in U.S. real estate has fallen by more than 80% since the market peaked in 2017. The cause of this year's recession was the coronavirus epidemic and increased competition in the real estate market. Given the pandemic-induced international travel restrictions, it's no surprise that the number of foreigners buying homes in the U.S. has dropped significantly over the past year.
But even without foreign buyers, the American real estate market is doing well. As travel restrictions ease, international students return to American colleges and universities, and foreigners are more likely to buy real estate in the United States. High housing prices and persistent shortages can be potential problems for property buyers. Foreigners bought 11,000 homes in Texas, making it the third most popular destination. Arizona, New Jersey, and New York were also hotspots for foreign real estate purchases. Buyers from Mexico and India conducted most real estate transactions in Texas.
The process of buying real estate by a foreigner in Texas
Let's consider in detail the rules for foreigners that must be successfully passed to purchase real estate in Texas:
Rule 1: Decide where to buy a home or investment property in Texas. There are no restrictions on foreigners purchasing real estate in the United States, which applies to those not currently residents of the United States but who want to buy real estate there. When looking for real estate in Texas, you must decide which location best suits your needs for a Texas home or property.
Rule 2: Find a licensed real estate agent who will find you the right property that fully meets your requirements. Finding a real estate agent is the most crucial rule in the buying process. A real estate agent will guide you through finding and finalizing a home purchase agreement, signing the documents, and closing the deal. Finding a real estate agent who has worked with foreigners who want to buy a home is essential. Foreign investors consider investing in U.S. real estate because buyers can face various obstacles and potential pitfalls when brokers are not used to dealing with non-US citizens.
For this reason, it is crucial to look for an accredited real estate agent with CIPS certification and experience in international and foreign transactions. CIPS-appointed real estate agents are individuals who are qualified to specialize in the preparation of smooth international transactions. They can significantly help foreigners and facilitate the process of purchasing housing.
Rule 3: Learn about your tax situation as a foreign resident in the United States. Let's say a foreign resident in the United States buys a house and plans to use it as a primary residence. In this case, you don't have to worry about additional tax burdens other than property tax. Non-US residents are taxed on the net income from investment property, excluding the property's appraised value. Foreign nationals who purchase real estate in the United States are subject to some form of tax liability, even if they receive income from the rental of the property or sell the property in the United States for profit. Foreign nationals purchasing real estate in the United States must obtain an Individual Taxpayer Identification Number (ITIN).
Rule 4: Start looking for a Texas home that fits your budget and all of your needs
The next critical step in buying your property in Texas is finding the right location for you. When becoming a homeowner, consider preparing a list of frequently asked questions. For example, schools, shops, and cultural institutions should be near your house. Consider the home's location and whether you prefer a city or a residential area. The answers to these basic questions will give you an idea of where you want to live. In which city do you want to live? How far is this home to entertainment? If you have children, is there a school nearby? You can ask your real estate agent these questions when looking for a place to live. Real estate agents can also help you find the perfect property by offering various options through open houses and online property viewings.
Rule 5: Submit and complete your final real estate offer.
When your new property is ready, ask your real estate agent about similar properties recently sold in the area. It is worth looking at the prices of comparable properties and agreeing on the purchase with the seller. This is a common practice in real estate because it gauges the best property prices. The last essential step is closing the property for the seller. The seller can accept the final offer, reject it or make a counteroffer at a different price. When your request is finally received, congratulations; you are one step closer to becoming a Texas real estate owner!
Rule 6: Carefully inspect your property
A thorough property inspection is essential and valuable. Ensure the seller the property is not damaged or incomplete. We strongly recommend hiring an inspector to conduct an inspection and ensure that your property is up to code. The inspector will thoroughly inspect the property to verify the building is in good condition. A real estate agent may appoint more than one inspector to assist in this critical process.
Rule 7: Sign a legal contract of sale with the seller
After thoroughly inspecting the property, you must enter a sales contract with the seller. A sales contract is a valuable legal document that binds you to purchase. The agreement contains the agreed price and other vital terms the real estate agent has negotiated on your behalf. When signing the contract, a deposit of 5-10% of the sale price is made. This 5-10% of the money is kept in an escrow account until the transaction is completed. The terms of the sales agreement may state that you have the right to withdraw from the deal in case of a change in legal status or a problem with financing.
Rule 8: Fill out the real estate purchase report. Your real estate agent can help you with the deed and the legal paperwork. The protocol is essential to protect the buyer's rights, so be sure to fill it out after signing the legal contract to purchase or sell real estate. In the United States, a property record is a report that shows and mentions the property's previous owners. Once the transaction is complete, the seller must transfer the property to you.
Rule 9: Home Loans Using U.S. Mortgages for Foreigners. You may have heard that while you need good credit to get a mortgage in the U.S., as a foreign buyer, you can get a mortgage with no credit. Some lenders in the U.S. offer discounted loans to new immigrants and buyers from other countries if they have no credit history in the U.S. These lenders also specialize in foreign mortgages for nonimmigrant visa holders. Many competitively priced home financing options are now available to foreign buyers in the United States. Foreign nationals generally can establish good credit before planning to purchase real estate in the United States for two to three years. Even non-residents don't have to pay cash for real estate and can put that money away as a profitable investment. Many lenders help foreigners who want to buy a house or other real estate in the United States without a credit history.
Rule 10: You are now the owner of the property!
When you have successfully executed a home purchase agreement, you have real estate in your name in the United States. At this final stage of signing a legal contract with the seller, certain documents must be signed to complete the contract. A real estate agent will help you with the closing. After completing all the formalities, the seller will hand over the keys to the property to you on the same day. Congratulations!
Documentation in the purchase of real estate in Texas
To buy real estate in Texas as a foreigner, you need to provide the following documents:
Valid passport
American visa
Social Security Number or International Tax Identification Number (ITIN)
If applicable, include previous and current bank statements and financial documents from foreign banks
Backup evidence
Certification check
Tax Refund
Creditworthiness
Key factors to consider when buying real estate in Texas
Zero state income tax. While some homeowners complain about the state's high property taxes, Texas' overall tax burden is relatively low compared to other states. In addition, many tax incentives encourage new businesses and startups to relocate to Texas.
Most people also buy real estate in Texas because of the warm climate. Summer is here all year round. Texas is one of the few unique places in the United States of America that can be enjoyed and seen at any time of the year. Texas is the perfect place for those who love warm weather. Climate is an essential factor to consider when moving to Texas. The southern part of the state is tropical; the western part is covered with deserts and mountains. When you're looking for wetlands and swamps, head east to Texas. There are many green areas in the north. Texas' strong housing market is one with strict rental laws. This is one of the key reasons why the Texas real estate market held up so well during the housing boom of 2007-2009.
Regarding real estate in Texas, there is something for everyone. From stable secondary market apartments to modern premium-class flats in big cities. Plenty of available lands allow everyone to develop their own home if you are a foreigner looking to build your building or property in Texas. More importantly, the warm weather and lack of red tape make construction faster and more profitable than anywhere else in the country. The state has no income tax, and affordable housing makes it attractive to young families and couples looking to relocate. The influx of families creates a pleasant atmosphere in all state cities. You will also find that Texas is a tolerant and diverse place with thriving multicultural communities that live compactly here.
Busy city life in Texas
Austin, considered the fastest-growing city in the United States, attracts many. Dallas is known for its oil and cotton production, and Houston is known as Space City because of its ties to NASA. Many have discovered investment opportunities in the real estate market and many profitable home options in Texas. You can make big money when you know where to look for deals, do your research, and have a sound investment approach. Texas attracts people not only with diverse and beautiful cities but also with an affordable lifestyle. Texas is one of the most popular destinations among people looking for jobs and housing.
An excellent place for sports fans
If you are a sports fan, Texas is for you! Residents of this state are big football fans. The state hosts football matches every Friday, and many movies have been made about it. Texas football is the most popular sport in the state, and Texas also loves baseball. Many people who move to Texas want to emulate their sports team and be proud of their state and team. You can also learn about the NBA, American hockey teams, or MLB as an immigrant. Texas has a lot of sports fans. Building lasting relationships with residents is a key to thriving, and community events are a great way to achieve this.
If you plan to invest in Texas or regularly travel to justify your investment and love good food, Texas is for you. Known for its fine cuisine, rich culinary history, and culture, Texas is home to some of the best cuisine in the country. Texas is America's culinary mecca, offering a wide variety of flavors. From flavorful Tex-Mex to gourmet breakfast tacos served from food trucks, Texas has something special for everyone. You'll find it all here when looking for fresh Gulf Coast seafood and delicious mesquite barbecue.
Texas is a profitable place for successful real estate investments. The market is strong, and there are many opportunities for active investment in different real estate types. The growing market opens up many significant opportunities for everyone, from small towns to cities of millions. Contact a qualified realtor to get all the information you need when buying real estate in the state. Anyone can purchase and own real estate in the United States, regardless of where they live. Irrespective of whether you are a citizen of any other country, no restrictions or laws prevent you from buying or owning real estate in the United States. You can buy a house in Texas without a green card. You don't have to be a U.S. citizen to buy a place in the U.S. You may also be a U.S. permanent resident, refugee, temporary resident, asylum seeker, or foreign home buyer. U.S. citizens, non-US citizens, permanent residents, and aliens can buy real estate in the United States.
