Frequently Asked Questions
Am I able to legally purchase property in the US even though I am not a US citizen?
Yes. Foreign buyers are welcome and encouraged to buy US Real Estate as it has become a great boon for the American economy
What’s an LLC, ITIN and EIN?
An LLC (Limited Liability Corporation) is a US business entity for holding real estate, and is recommended for property purchases. LLC’s have many legal and tax benefits
An EIN (Employer Identification Number), the Australian comparative is an ABN, is needed to open a bank account for your LLC, to purchase a property, and pay taxes.
ITIN (Individual Tax Identification Number) the Australian comparative is a TFN (Tax File Number). It is required by the American government for taxation purposes.
All these Terms and Conditions will be explained to you by your US Tax Agent who we introduce you to as part of our Service.
What’s the best city for investment?
There is no ‘best city’. However, many cities are far more desirable for foreigners for their property investment as they offer far better investment conditions.
What kind of returns can I expect?
Often people get carried away with sales talk of incredibly high rental returns. Don’t be fooled. The higher the return means much higher the risk. That said, rental returns in the US offer great investment returns that are far superior to most other countries.
Can I get finance for my US investment and can I use the equity from my current US properties to refinance and purchase more?
The short answer in most cases is ‘Yes’! Non-Recourse lending is approved for foreign nationals at a 60% – 65% LTV and up to 30 year term, with best interest rates ever offered to Foreign Nationals.
Also available are specially designed programs from re-finance to Lines of Credit being now available for Foreign Investors, something that has not been available in the past.
We can also offer low-doc and no-doc loans via private lenders and other institutions. These loans typically require a 50% down payment with a higher interest rate than from traditional lenders. Despite these less favourable terms, this type of financing can still be viable and beneficial for many investment strategies.
Another option is to take an equity Line of Credit against your property in Australia and use this money to purchase in the US. We can assist you with this.
Can I purchase property through my Self Managed Super Fund (SMSF)?
‘Yes’. It is important to speak with your superannuation advisor to strictly abide by Australian law, but from a US investment point of view, Australian Superannuation Funds have been very big investors in US Real Estate and it can be a fantastic option to diversify your holdings and hugely increase your returns.
What are the costs involved in purchasing a US property?
Unlike most companies, USPSA does not charge a ‘Fee for Service’ or ‘Membership Package’. These fees can amount to some thousands of dollars for simply introducing you to the professional services you require, or take “kickbacks” for the introduction to those services. Our model is totally transparent.
We derive our income from typical Real Estate Commissions, and under our new Business Model, we offer profit share for individual clients depending on your strategies.
What is the buying process?
Typically, the process of buying property in the US is no different to most countries, except that the cost is lower by comparison. For example, there is no Stamp Duty in the US, a massive saving comparing entry costs in Australia.
The main cost associated is the ‘Closing Cost’, (called ‘Settlement Cost’ in Australia), which can be from as little as US $1,000 depending on which market the purchase is in. Then there are the usual costs of property such as Building Inspection, Insurance, Rates and Taxes on the Property, Property Management and Accounting.
Do foreign investors pay tax in the USA?
Yes. Income earned in the US is taxable income there. The good news is that you are not double taxed, meaning, any tax you pay in the USA is deducted from your Australian tax commitment, due to the Taxation Treaty between Australia and the US.
Your accountant can explain any taxation issues you may have.
Do Australians pay capital gains tax when selling a US investment property?
Yes, but the US Capital Gains Tax is far different to the Australian Capital Gains Tax. In the US if you sell a property, making a profit, and the funds are reinvested into another property within 180 days, no Capital Gains Tax is paid. It is only when you take out the funds and not re-invest that tax is paid.
Again the conditions are favorable with the Taxation Treaty, and your accountant can explain your personal situation.
Can I claim visits to the US as a tax deduction?
Yes, but you must be the beneficial owner of the property you are going to visit, not going to the US to purchase your investment property.
Once again, your accountant can explain your personal benefits as there are conditions.
Can you depreciate a US property for US or Australian tax purposes?
Yes, the US tax code allows for the depreciation of investment properties, and reduces your taxable income. Again, please take advice from your accountant.
What if I want to sell my US property?
No problem. With our new Business Plan Model, Buy-Rehab-Sell, that is all taken care of.
For those who prefer to hold property for investment over the longer term, we can introduce you to agents on the ground in the US who can assist.
How do I go about managing my rental property in the US?
Property Management is often the major problem for Foreign Investors in the US.
USPSA only offer properties where we have professional companies to run the property management, and we facilitate introductions to those companies.