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Experienced Foreign Investment Attorney

Investing in real estate in the United States opens savvy foreign real estate investors to our real estate market. However, American real estate and investment laws can be very complicated and different from an investor’s home country.

Whether you are looking for ways to expand your investment opportunities and diversify holdings or you are looking to expand your commercial presence in the United States, you will need the assistance of an experienced foreign investment lawyer to help you navigate the often complicated terrain of international real estate investment.

At Sishodia PLLC, attorney Natalia Sishodia and our skilled foreign investment lawyers are well-versed in international real estate law and investments as they concern the foreign investor. We are prepared to protect our clients’ interests each step of the way during a real estate purchase,  sale, or litigation. With our experienced New York real estate attorneys on your side, you have an aggressive and knowledgeable ally working diligently to ensure that your legal and financial interests are protected and that you understand all responsibilities, options, and consequences under our laws. To learn more about how we can help with your investment planning, call us today at (833) 616 4646.

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The Legal and Tax Implications of International Real Estate Transactions

Expanding real estate holdings into the United States can offer many profitable opportunities for an international investor. But, at the same time, it can involve many legal and tax considerations along the way and can expose a buyer or seller to many risks and uncertainties.

United States laws surrounding international investors can be complicated since investment, tax, and real estate laws will differ drastically from one country to the next. This requires that a foreign national making a real estate investment in the United States get professional guidance to ensure that all the potential issues that may arise are considered and proactively addressed. 

Having a skilled lawyer who is experienced in American real estate acquisitions and investment law is important. International investors must understand all applicable laws surrounding their potential purchase. At Sishodia PLLC, attorney Natalia Sishodia and our skilled team of international investment attorneys are well-versed in the practices involved in foreign real estate investment law. They will offer guidance and assurance that transactions are made properly with our client’s best financial and legal interests in mind.

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Investing in New York Real Estate as an International Buyer

The property market in the United States offers an inclusive environment for international buyers, regardless of their nationality or residency status, thereby allowing investors from around the world to explore diverse opportunities in residential or commercial real estate within the country.

Foreign buyers have the option to purchase single-family homes, or condo units, or invest in commercial properties. However, one potential hurdle they may encounter arises when attempting to buy into a housing cooperative.

In the case of a housing cooperative, often referred to as a co-op, the buyer does not directly acquire ownership of the property itself. Instead, they obtain a share in the cooperative that owns the condominium building.

While co-op properties may provide lower prices compared to other housing options, they are primarily intended for use as primary residences and are not suitable as investment properties.

If you are a non-resident seeking an investment property in the US, the easiest route may be to fund the purchase with cash. Obtaining a local mortgage can be challenging without a local credit history. Although it is not impossible for foreigners or non-residents to secure a local mortgage, they may encounter higher interest rates and be required to provide a substantial down payment to qualify for the loan.

Common Challenges to Foreign Property Investors

Working with international buyers and in light of new regulations, we observed that even with investing billions of dollars in New York’s market, foreign investors still faced several challenges. Here are some of those challenges:

It is a well-known fact that the U.S. is a country of immigrants. New York City is the most populous city in the United States with a population of 8,258,035 as of July 2023. The NYC Department of City Planning states that “half of all New Yorkers speak a language other than English at home, and over 200 languages are spoken in New York City.”

However, foreign investors still face many challenges associated with language barriers. Language barriers can create significant challenges for foreign investors in tackling New York City’s laws and regulations. These barriers may lead to difficulties in understanding contracts, adhering to local regulations, or communicating effectively during negotiations. Misunderstandings stemming from language differences can result in delays, legal complications, or financial risks. One solution to this problem is to cooperate with law firms that can not only speak but also provide you with valuable legal advice in your native language. People with a similar background to you in terms of culture and/or language who can truly understand the mentality of foreign investors and address your needs to achieve results aligned with your goals.

A skilled foreign direct investment attorney from Sishodia PLLC can help overcome these challenges. With experience in assisting international clients, we can provide clear guidance, accurate translation of legal documents, and effective communication throughout the investment process. We can help you understand your obligations and opportunities as an investor in New York, enabling smooth transactions and protecting your interests in a new market.

The Financial Crimes Enforcement Network (FinCEN) has renewed its Geographic Targeting Orders (GTOs), from October 15, 2024 effective through April 14, 2025. 

These orders require U.S. title insurance companies to identify individuals behind shell companies involved in all-cash purchases of residential real estate in specific metropolitan areas, including New York City. The purchase amount threshold remains $300,000 as with previous GTOs. Financial information on all-cash purchases must be disclosed to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

These measures aim to curb illicit activities by increasing transparency in real estate transactions. FinCEN acknowledges the cooperation of title insurance companies and the American Land Title Association (ALTA) in these efforts. The GTOs have provided valuable data on purchases potentially linked to illegal enterprises, aiding in tracking illicit funds and informing future regulatory actions.

However, there have been several gaps in the above-referenced regulations, such as disclosure would apply only to all cash checks and not the wires received by the Title Companies; or the above regulation was a court order addressed to specific Title Company underwrites, so it can be interpreted that other underwriters are not required to disclose buyers identities.

For foreign investors, especially those unfamiliar with U.S. regulations, compliance with these orders is crucial. Our experienced foreign direct investment attorneys at Sishodia PLLC can provide guidance on these requirements, helping investors understand and adhere to the necessary legal standards, thereby facilitating smoother and compliant real estate transactions.

Most foreign investors buy all-cash newly developed properties, but, for example, with 3 million to invest, the same investors could invest in two different properties by putting 50% down and financing the rest.

The Community Reinvestment Act of 1977 (CRA) “applies to banking institutions with deposits insured by the Federal Deposit Insurance Corporation (FDIC), such as national banks, savings associations, and state-chartered commercial and savings banks. The CRA requires federal banking regulatory agencies to evaluate the extent to which regulated institutions are effectively meeting the credit needs within their designated assessment areas” (where institutions have local deposit-taking operations).

In spite of established banking regulations, challenges remain for potential investors planning to work with banking institutions in the U.S. In particular, new criteria in KYC banking regulations have led to a number of challenges from rising costs to the difficulty of implementation.

In addition, investors can be hindered by the absence of their own credit story. Some lenders in New York are friendly to investors and will require only proof of personal financial track records. However, in this case, investors will pay back for this kind of “friendship” by providing a huge down payment and a hefty interest rate.

Working with foreign investors, we observed that HSBC runs the most competitive investor-friendly lending program. Some other lenders that we would recommend for foreign investors to check are: Citi Bank, Guardhill Financial, and private lenders depending on the particular case, location of the property, and the investor’s background, investor’s portfolio, and liquidity. However, when you are a foreign investor, it is always better to work with the Mortgage Banker that has experience dealing with investors with particular backgrounds as it may affect the process. Experienced Mortgage Bankers can guide you accordingly and make the entire borrowing process as smooth as possible.

While for the American owner, it is a norm to pay Real Property Taxes on a property owned, many other counties do not have Real Property Taxes, thus it is not uncommon to meet foreign investors in the USA who miss their property tax payments and faced with the Tax Lien Situation.

When a homeowner fails to pay taxes, the government agency can place a tax lien on the property for the unpaid amount. The property that has a lien attached cannot be sold or refinanced until the taxes are paid and the lien is removed. In tax lien states, when a lien is attached to the property, the taxing authority issues a tax lien certificate. These certificates can be sold to a third party at auctions. In tax deed states, when a third party purchases a tax deed, it is purchasing an actual property. Thus, when a tax deed has been sold to a third party, the prior owner cannot reclaim their property.

According to the “State Guide To Tax Lien And Tax Deed Investing,” “New York is a mixed state. Some counties have tax lien sales and others have tax deed sales. Most of the state conducts deed sales. Nassau County sells liens, as do the five boroughs of NYC. The tax lien sales in NYC, however, are not open to investors. They are private sales where the liens are sold to city fund companies. Later on, these companies may have public sales.”

Once the lien is sold and a new owner threatens the investor with a summons to start foreclosure, it is an additional legal expense for the foreign owner. At that point, there isn’t much of a window for negotiations and to safeguard the property. The investor then has to pay off the lien amount along with any interest accumulated in full, cover the plaintiff’s attorney legal fees, and pay for their own legal fees related to the foreclosure and settlement procedure.

The IRS states that when a foreign person sells or transfers a U.S. real property interest, the transaction falls under the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA). Under FIRPTA, buyers (transferees) purchasing U.S. real estate from foreign sellers are generally required to withhold 15% of the sale price to cover potential tax obligations. If buyers fail to withhold this amount, they may be held responsible for the tax, unless specific exceptions apply.

One notable exception is when the buyer intends to use the property as a residence and the sale price does not exceed $300,000. In this case, the buyer must be an individual, and only notification is required, eliminating the withholding requirement.

It’s important for real estate investors to be aware of these rules, as overlooking FIRPTA requirements can lead to unexpected costs. For instance, a foreign investor might face a 15% withholding on the sale price when selling the property if proper guidance wasn’t followed during the purchase.

Whether you’re a foreign seller or buyer, consulting with an international real estate attorney can provide valuable insights into FIRPTA withholding and help you understand your obligations.

The IRS states that nonresident aliens (individuals who are neither U.S. citizens nor residents) are subject to U.S. estate tax on assets located within the United States.

These U.S.-situated assets include real estate, tangible personal property, and securities of U.S. companies. Notably, a nonresident’s stock holdings in American companies are subject to estate taxation, even if the certificates are held abroad or registered in the name of a nominee.

The United States has estate tax treaties with several countries, which can provide more favorable tax treatment to nonresidents by limiting the types of assets considered situated in the U.S. and subject to U.S. estate taxation. Executors for nonresident estates should consult these treaties where applicable. 

For nonresident aliens, an estate tax return must be filed if the fair market value of the decedent’s U.S.-situated assets exceeds $60,000 at the time of death. The estate tax rates range from 18% to 40%, depending on the value of the taxable estate.

In addition, the article “Federal Estate Tax Considerations for Foreign Investing in the United States,” adds that “the estate of a nonresident alien may deduct from the gross estate the value of property passing to the decedent’s surviving spouse if the spouse is a U.S. citizen or resident alien regardless of whether the spouse lives in the U.S. or abroad. However, if a spouse is also a non-resident alien, the unlimited spouse exemption does not apply.”

How We Can Help with International Real Estate Transactions

United States real estate investment will require that international investors understand and navigate the often complex nature of local, state, and federal regulations, as well as tax treaties that govern these transactions. With our deep understanding of foreign investment in American real estate, we can assist our international clientele in accessing this market while providing efficient legal and financial guidance through all the necessary procedures.

We help international investors navigate:

Real estate purchases by international investors can be exceptionally complicated transactions. It is critical for a foreign investor to have a skilled attorney who understands how these laws work. Unfortunately, many investors sustain financial losses without the aid of an experienced international real estate investment lawyer with an in-depth understanding of real estate investment laws in the United States.

Commercial real estate transactions are any transaction between two or more people that involves the sale, purchase, or leasing of property for commercial purposes.

Our real estate attorneys have extensive experience in real estate transactions including:

  • Businesses of all sizes, from small to medium-sized
  • Holding companies in regional areas
  • Buildings for offices
  • Housing units large
  • Healthcare facilities
  • Education facilities

We have worked successfully with developers, owners, and operators throughout New York City. Our real estate lawyers in NYC are familiar with the complicated rules and regulations that surround transactions both internationally and locally. We can protect your interests during the entire transaction. Our team can assist international property investors and developers at every stage of the transaction.

Many commercial real estate deals involve more than just buying a property. Commercial investors need to consider whether the property can generate sufficient revenue from tenants and improvements in order to earn a decent return. Investors must consider environmental issues that could affect property value, such as zoning restrictions that limit how the property can be used, unlevered cash flow, and internal rates of return. This means that you need to be more thorough in your research before closing the deal.

An NYC attorney for international investments who is familiar with the procedures and rules involved in commercial transactions can help you protect your rights and ensure that your transaction goes smoothly.

Over the last few years, foreign investments in U.S. real estate have increased dramatically, especially in New York City. The real estate market in New York is expected to continue growing. Foreign investors are flocking to New York City in order to purchase real estate. However, few people realize the serious tax and legal implications of investing in U.S. real property without adequate planning.

When purchasing New York City property and creating a holding structure, there are four main considerations: 

  • Taxation on operating income and gains
  • Repatriation of profits
  • Taxation upon death
  • Privacy and reporting requirements

Problems often arise when the property is sold or after the property passed through an estate, and the owner/beneficiary then has to pay a large tax bill.

If the foreign client invests in NYC real estate property, the combined Federal, New York State, and New York City taxes on the gains could reach 65%. However, with proper structuring, capital gain taxes on the sale of New York property can be reduced to no more than 20%. 

Good planning and advice on real estate transactions can significantly reduce or eliminate U.S. taxes associated with the ownership and sale of U.S. real estate.

A client’s future goals, country of residence, and other factors will all influence the appropriate real estate holding arrangement. Speaking to an experienced foreign investment lawyer may be able to help the client understand their rights in the real estate transaction and help them make the best out of their purchase or sale.

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Russia

Switzerland

Japan

Canada

United Kingdom

UAE

India

Turkey

China

South Korea

France

Italy

Bulgaria

Ukraine

Singapore

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Getting the Assistance of an Experienced NYC Foreign Investment Attorney

It takes serious understanding and planning to structure a real estate transaction keeping all possible requirements, tax implications, and legal pitfalls in mind. While the law can be complicated when it comes to international investors, having an experienced attorney can help. A skilled foreign investment attorney knows the laws and understands the justice system. They can help the international investor understand what their next steps should be and what law is involved in their purchase.

At Sishodia PLLC, our New York City international investment attorneys are dedicated to understanding each client’s unique goals and circumstances. We provide comprehensive advice and guidance to minimize potential risks and issues. To discuss your investment needs, please call us at (833) 616-4646 or contact us online to schedule a free initial consultation. 

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