If I am not a US citizen can I still buy real estate in the US? - Foreign Transactions

04/27/2007 - Category:Real Property - Foreign Transactions - State: ALL #3364

Full Question:

I live in Canada and was interested in exchanging ownership of property that I own outside of the United States for property in Tennessee. I was told only a resident of Tennessee can hold title to property in Tennessee. Is this true?

Answer:

No. A nonresident of Tennessee may own property in Tennessee. However, when one of the parties is a non US citizen, ownership, as well as other issues arise. When the buyer or seller is a foreigner, special rules may apply. Under the Foreign Investment in Real Property Tax Act (commonly known as FIRPTA), enacted in 1980, a foreign buyer of real estate in the United States must withhold 10% of the purchase price and send it to the IRS.

A withholding certificate can be applied for to eliminate the payment, reduce it or otherwise resolve the issue before closing. However, the FIRPTA must be complied with in this type of transaction. The IRS has a guide for Tax issues relating to non US citizens located at this address, which is rather complex, http://www.irs.gov/pub/irs-pdf/p519.pdf. Some States do limit ownership of property by non US citizens. The constitution of Oklahoma provides that a non US citizen cannot own property for more than 5 years unless the buyer becomes a bona fide resident of that state. So, if you reside on the property for a majority of each year, you would be a resident and could own the property as long as you remained so. However, if you are not a resident of the state, you could lose the property. Other states have similar provisions including California, New York, Arizona, North Carolina, as well as others. Tennessee could have a similar provision or law.

The following states, in addition to those noted below, have some sort of restriction on aliens owning land: California, Illinois, Kansas, Nevada, New Hampshire, New Jersey, New York, and North Carolina.

Iowa:

A non-resident alien, a foreign government, or business incorporated in a foreign countryor majority owned directly or indirectly by non-resident aliens, may not purchase or acquire agricultural land, with certain exceptions. Agricultural land acquired under the exceptions is subject to reporting requirements.

Minnesota:

Only US citizens, permanent resident aliens, and business entities whose stock and beneficial ownership are at least 80 per cent held by US citizens or permanent resident aliens may own agricultural land.

Missouri:

Non US citizens and businesses in which non-US citizens own a controlling interest may not own agricultural land unless the non-US citizen is a resident in the US No corporation, Missouri or out-of-state, may engage in agriculture after 1975.

North Dakota:

A non-US or non-Canadian citizen who is not a resident alien in the US may not hold agricultural land.

Pennsylvania:

Foreign governments and non-resident non US citizens may not hold more than 100 acres of agricultural land.

South Dakota:

Foreign governments and non-resident, non-US citizens may not hold more than 160 acres of agricultural land. No in or out-of-state corporation may own agricultural land.

Guam, Indiana, Oklahoma, South Carolina, Wisconsin, Wyoming Florida, Hawaii, Idaho, Kentucky, Mississippi, Montana, Oregon - These states have some limitation on the ownership of real property and preference in the access to - or ownership of land.

Guam:

Alien owned businesses may only own or rent land through Guam corporations.

Indiana:

Limits amount of land held by aliens. Resident and non-resident aliens may acquire real estate but must dispose of any land over 320 acres within five years of acquiring it, or the excess acreage will escheat to the state.

Oklahoma:

Non-US citizens may not own real estate, in the state, with certain exceptions.

South Carolina:

Non-US citizens or corporations controlled by non-US citizens may not hold more than 500 000 acres of land.

Wisconsin:

Non-US citizens not resident in the US, corporations with more than 20 per cent of their stock owned by them and non-US corporations may not hold more than 640 acres of land.

Wyoming:

A non-resident not eligible for citizenship may not hold real property except for personal use and not exceeding one acre.

Florida:

Non-immigrant visa holders do not receive a homestead exemption.

Hawaii:

Citizens and residents of Hawaii and US military war veterans receive preference in drawings from residential and agricultural leases of state lands. Residency requirements exist foraliens and stockholders of corporations and associations who wish to rent land in designated agricultural parks.

Idaho:

State land may only be sold to US citizens.

Kentucky:

Real estate owned by a non-resident alien may be escheated by the State eight years following its acquisition unless:
a) the alien becomes a US citizen,
b) they have declared their intent to become US citizens; or
c) the corporations are organised under state law
.

Mississippi:

Non-resident aliens may not hold land longer than 20 years before becoming a US citizen except that they may acquire 320 acres for industrial development and 5 acres for residential purposes. Moreover, a non-resident alien may not purchase public land, except that they may purchase 320 acres of public land for industrial purposes and 5 acres for residential purposes.

Montana:

State lands may only be sold to US citizens, those who have declared their intent to become US citizens or corporations organised under state law.

Oregon:

State lands may only be sold to US citizens or those who have declared their intent tobecome US citizens.

Montana Mining:

Montana has a reciprocity test for coal leases on state owned land. You should consult further information for your specific situation.


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04/27/2007 - Category: Foreign Transactions - State: ALL #3364

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