Real estate

United States real estate

The federal tax, the security review and the mortgage rule apply in every state. They are written once below. Each place then opens into its own topics. A state note stays at state level. A city keeps its own note.

Places

CityNew YorkFive boroughs, four tax classes, and a split between condominiums, co-ops and rent-stabilized apartments. The city line is the edge of the city tax and the city survey.
RegionMiami and South FloridaThree South Florida counties under one state condominium and foreign-buyer statute. The tax roll, the flood map and the building department stay with the county.
StateTexasA state with no personal income tax and with several housing markets. Houston has no zoning. The homestead exemption and the appraisal cap are for a residence.
StateCaliforniaProposition 13 sets the property-tax base. A statewide rent cap covers many units and leaves others out. Los Angeles, the Bay Area and the Central Valley are separate markets.
CityChicagoThe City of Chicago inside Cook County’s classification system. Residential property is assessed at 10 percent of fair market value, most commercial property at 25 percent, before the state’s equalization.

Paths still open

These places are registered. Their topics are open until a note is written.

Shared federal rules

Federal tax on a sale

A foreign person can buy U.S. real estate. The federal question that arrives at the exit is FIRPTA. The Internal Revenue Service states that the buyer generally must withhold 15 percent of the amount realized when a foreign person disposes of a U.S. real property interest. Dispositions before 17 February 2016 were withheld at 10 percent. The amount realized is the cash, the value of other property, and liabilities the buyer takes or that stay on the property. Gain is computed later.

The IRS describes an exception when the amount realized is $300,000 or less and the buyer intends to use the property as a residence for at least half the days it is used by anyone during each of the first two years. If that use fails, the buyer can be liable for the withholding. A lower withholding can be requested on Form 8288-B. The withheld amount is a payment on account. The seller’s actual tax is computed later. State withholding, where a state imposes it, is a second form.

FIRPTA withholdingInternal Revenue ServiceThe buyer generally withholds 15 percent of the amount realized when a foreign person disposes of a U.S. real property interest. A residence exception exists at $300,000 or less if the use test is met. Withholding is a payment on account. The seller’s tax is computed later.

National-security review

The Committee on Foreign Investment in the United States can review certain real estate transactions by foreign persons under 31 CFR Part 802, in force for transactions from 13 February 2020. Treasury describes the jurisdiction as purchases, leases and concessions in and around specific airports, maritime ports and military installations listed in the regulations. An ordinary house or apartment outside those geographies is not, on that description, a covered real estate transaction.

The distance test is the regulation and the Treasury map. A photograph of a skyline is the wrong instrument. Covered ports include large-hub airports on the Department of Transportation list. A building next to one of those airports can raise the question. A building across the metro usually falls outside it.

CFIUS real estate instructions, 31 CFR Part 802U.S. Department of the TreasuryCovers certain purchases and leases by foreign persons in and around specified airports, maritime ports and military installations. An ordinary home outside those geographies stays outside the rule.

The loan and the title

The deed and the loan are separate contracts. A buyer can pay cash. A consumer mortgage in the United States is underwritten against income, credit and the property, and most closed-end consumer mortgages sit under the federal ability-to-repay rule. A foreign buyer without a U.S. credit history, U.S. tax returns or a visa the lender accepts may fall outside a given bank’s program. That is a lending outcome. Title is a separate question, and these sources leave the person free to hold the property.

Agency guides and bank overlays change, and they differ for citizens, permanent residents and others. Each place note leaves the down-payment ratio in the lender’s approval.

Ability-to-repay and qualified mortgage standardsConsumer Financial Protection BureauRegulation Z § 1026.43. A lending rule for covered consumer mortgages. Not a citizenship test for ownership.