- Foreigners can buy land and use it in the USA
- Foreigners buying property are subject to US Tax law and tax treaties
- Foreigners must pay property taxes
Land ownership and citizenship laws vary by country, but what about the United States? Can foreigners own or purchase land in the USA?
Yes, foreigners can buy and use land in the United States. There is no hard limit on the amount of land or its use; though local and state restrictions may apply. Foreign investment in land is common in the United States.
The information used in this article comes from our study of federal, state, and local laws on land and foreign buyers in the United States.
Table of Contents
Private Property In The USA
Americans have extremely strong private property rights. In fact, they’re some of the strongest in the world. There are many parts of the United States where real estate can be used in almost any way without restrictions, and land is often affordable in these areas. So can a foreigner buy land in USA and its territories, and is it protected like for US citizens?
There are additional rules regarding how property taxes and investment property is handled, but these are monetary considerations that have little to do with how you actually use the land. However, how you use the land can influence the amount of taxes you pay. We’ll get into this more later.
So, do foreign buyers have the same property rights as American citizens? For the most part, yes. Everyone’s property in the USA is well-protected. How long you can be physically present on your property varies (and has to do with your resident status and visa restrictions), but your ownership is secure.
Asset Forfeiture/Land Seizure By Government
Unlike some countries, where the government can arbitrarily seize property owned by citizens and foreigners, this practice is not generally allowed in the United States. There are only limited circumstances in which land can be taken from foreigners or citizens. Generally these circumstances fall into one of two categories: asset forfeiture and eminent domain.
Eminent domain is a practice where, if land is required for a public works project such as a highway, the government can go through a legal process to take possession of property where the project is to be built.
Land cannot be taken without just compensation, and most people work out a deal with the government for an agreed-upon sum. Others fight, and many win and keep their land. Your rights are not limited, as you can fight the eminent domain in court.
It’s highly unlikely that any one piece of property will be involved in an eminent domain dispute, but we included it in this article so foreign buyers and those owning property have a general idea of what the term means.
Asset forfeiture is a totally different concept. Foreign buyers need to be aware that the police can take possession of almost any kind of property if it’s proven to be used illegally, particularly for drug manufacturing or distribution. It doesn’t matter if it's by you or someone using your investment properties; you can ultimately be responsible for whatever happens on your land.
Asset forfeiture can also happen if there’s a need to settle debts, and a foreign buyer or citizen has no other way to pay. Keep in mind that asset forfeiture can only occur after conviction or a civil court ruling.
In the United States, foreclosure is a process which banks use to reclaim property if bills go unpaid for too long. It’s important to note that only banks can induce a ‘foreclosure’ of a property for unpaid mortgages; property seized for other unpaid debts is done through a different process.
Foreigners can be foreclosed upon just like citizens if they miss too many payments. Additionally, it can be much harder for a foreigner to resolve foreclosure issues due to distance, language barriers, and other issues that arise due to work or resident status.
Can Foreigners Buy Property In Foreclosure?
Purchasing foreclosed properties as foreign investors is common and legal. Foreigners can buy foreclosed properties just like citizens can, and it’s often a less expensive way to get sought-after commercial real estate in popular metro areas. Your local bank can guide you through the property purchase process, and any capital gains tax you may have to pay if you profit from the sale.
How Much Does Land Cost In The United States?
This question has no all-encompassing answer, as it varies enormously by location and property type. For example, an acre in a rural area can cost as little as $1,000 USD, whereas a 700 sq-ft house in a top neighborhood can cost upwards of $1,000,000 USD.
The average price of an acre of land in the United States was $3,381 in 2021, and this figure takes into account all land in cities and rural areas. The average price of a completed house in the United States was $348,079.
Habitable house prices vary from $20,000 to well over $2,000,000, and abandoned homes can be purchased in some areas for $500 (with strings attached, of course). Generally, you can find a livable house in a decent neighborhood for $150,000-450,000 in most suburban areas.
Buying Property In The United States With A Real Estate Agent
Buying property in the United States can be a simple or complicated process, as there are many ways to go about it. You can purchase property the old-fashioned way; meeting with the owner, paying cash, and receiving the deed. Of course there’s a bit more to it than that, but the simplest methods have remained unchanged.
The most common way to buy property in the United States is through a real estate agent. Buying property can be complicated (especially houses), and a real estate agent can help you navigate the process or track down the right piece of land.
If you’re buying property from overseas, it’s absolutely essential to have a real estate agent on the ground that you trust–a person who can actually visit the property in person and make sure all of the paperwork is in order. Real estate agents take a cut of the purchase price, which can be significant–but rates and percentages are always agreed upon beforehand.
Real Estate Tax and Property Taxes
Property taxes are a part of life in the United States, and they range from menial and inconsequential to monumental. This depends entirely on the area, type of property, and value. In most parts of the country, these taxes are collected based on a survey of the property and an estimated value.
Property taxes tend to be higher in states with low or no income tax. It’s a way of compensating for revenue not taken in elsewhere. If you plan to work and live on the property, the tax implications of income and property tax must be carefully considered, as it may still be cheaper to pay higher property taxes in a state without income taxes (especially if you’re a high-earner).
Investigate the property tax rates in an area before you buy property there. This may require making a few phone calls, but most real estate websites display estimated annual taxes near the list price of a property. If not, you can always ask your agent for insight or call the county offices for a better sense of direction.
Other Kinds Of Taxes For Foreign Buyers
Foreign citizens may be subject to different tax rules than citizens, and virtually all income from the property must be reported for tax purposes. Capital gains taxes, net income from the property, and many other factors will be considered. Laws like the Real Property Tax Act must be considered.
Taxes in the United States are a mess and quite complex. Failure to report income or mistakes can have serious consequences; especially for foreign citizens. For these reasons, many foreigners hire domestic accountants and tax experts that specialize in this exact topic.
Purchasing Property With A Loan
Most foreigners borrow money to purchase property in the United States. As far as the actual transaction is concerned, the buyer typically doesn’t care where the money comes from–whether that’s a legitimate foreign bank or a domestic lender–as long as the full amount is received. As long as you follow the rules, it’s typically up to you where the loan is held.
Getting A Mortgage Or Foreign Investment Home Loan
In the United States, some foreigners will have difficulty finding a mortgage lender willing to work with them. This has to do mainly with work history, credit, and other systems that may work differently abroad. However, if your history, finances, and paperwork are in order, you should be able to get a mortgage.
The longer you work in the United States, the better your chances of getting a mortgage. At the end of the day, the bank is primarily concerned with verifying that you’ll be able (and will) pay back the loan. Foreign citizens can get both a conventional mortgage and an FHA mortgage in the United States if they meet the qualifications.
How To Get A Mortgage In The United States As A Foreigner
The best way to get a mortgage is to contact several banks and inquire. People typically don’t settle for the first rate they get, as there’s often a better deal somewhere else. Call a bank and set up an appointment, as they can walk you through the process that fits your individual financial and residency purposes.
About THE AUTHOR
Brittany has been in the land business since 2020 when the world was starting to shut down. Since then, we’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans mostly in the western United States. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.Read More About Brittany Melling