Tax issues for foreign nationals when purchasing property in New York City.

//Tax issues for foreign nationals when purchasing property in New York City.

Tax issues for foreign nationals when purchasing property in New York City.

There are many foreign investors interested in purchasing property in New York City, which is increasingly the engine that drives the real estate industry here. However, before attempting to purchase a real estate property, a purchaser should be aware of some simple rules of thumb before they make an offer. For purchases over $1,000,000, there is a “mansion tax” of 1%. For some properties and new developments, the developers of the property might require a buyer to pay “transfer taxes,” which are charged both at the city and state levels. New York City charges a 1% tax for sales under $500,000 and 1.425% for sales above that price. The state of New York’s transfer tax is a flat 0.4% for all sales. This is not something buyers will be responsible to pay if their property is not a newly developed. Buyers who are securing financing for their purchase will also find that the lender will be responsible for a “mortgage recording tax” of 0.25%. For sales under $500,000, that tax totals 2.05% (1.8% to be paid by the buyer), and for all other sales the tax is 2.175% (so 1.925% to be paid by the buyer).

Estate Tax Consequences

There are some differences to be aware of in the terms of estate tax. If it is a foreigner who is not a US citizen nor a permanent resident, i.e. green card holder, he or she will be subject to hefty federal and state estate taxes, which means the property cannot be sold unless the estate pays off the estate taxes due within nine months after the death of a loved one. It’s a crucial bit of information that is easy to overlook and it’s something that any foreign purchaser should be aware of.

Federal tax deferral program does not apply to foreigners

For any foreign investors purchasing property in New York City, there are no restrictions as to how many properties or what type of property they can buy. However, when foreigners try to sell the property in the future, they are not eligible to utilize the federal tax code (IRC Code Section 1031) that is known as “Section 1031 Exchange”. This tax code is to benefit investors who are selling property for profit. They do not have to pay capital gains right away if they can purchase another real estate investment property and close the title within 180 days. However, this tax benefit rule does not apply to foreigners.

Capital Gain Tax

A foreign seller has to file federal capital gain tax at the closing table, no matter whether the sale results in a profit or a loss. A foreign seller will have to pay a federal capital gain tax of 10% of the selling price to the US Treasury. At the end of the year, when the foreign seller prepares their personal tax return, they will be able to get back any amount overpaid or pay any balance due on the personal capital gain tax. This is quite different from a domestic seller.

There are a lot of benefits for foreigners purchasing property here, especially in the New York City area because the property value is booming, the rental income is pretty stable and with the higher demand for inventory in the future, it is foreseeable for the near future that property values will continue to increase. Each foreign national, however, should thoroughly discuss the pros, the cons, and the tax consequences with their real estate attorney and accountant before they make an offer or sign the contract.

Menicucci Villa Cilmi PLLC is proud to work with the rapidly growing Chinese community in New York City. Call us today if you have any questions about buying property as a foreign national. Jackie Huang speaks Shanghainese, Cantonese, and Mandarin and she can help you cut through the red tape and assist you and your family when buying a home, co-op, or a condo.

外国人如何在纽约州买房产?

 

有很多外国的投资人对在纽约市或附近地区例如长岛买房子有兴趣。这对纽约市的房产市场来说也是一个好事。外国人在购买房产之前要了解一下的以下事情:

第一个,关于遗产税的问题。在本国人和外国人之间买房他遗产税是有区别的。如果一个外国人,既不是美国公民,又不是绿卡持有者,那他们就会支付很高的遗产税。这个房子没有办法出售。必须要在去世的业主过身后九个月之内支付遗产税。这是所有外国购房者必须了解的。

第二个就是联邦的投资人延税计划1031 exchange. 外国人在纽约州买房子,买在哪里,买多少,买什么样的房子都没有任何的限制。但是如果外国人要出售的时候,他们是不能够用享受联邦的1031 exchange 延税计划来延迟支付投资利润增值所得税。也就是说,如果出售的时候房子有利润,国内的业主是不需要马上支付增值所得税,而是通过重新再购买一个投资房,就可以延迟支付这个增值所得税。但是该购入的房子的交易必须在第一个出售的房子过户以后180之内完成。但是这个规定外国人是不享有的。

完成,但是这个规定不过的外国人是不想有的。

 

第三点:增值所得税支付的时间要点。外国的卖家必须在过户的时候就要支付联邦的增值税。不管她是到底是亏了还是赚了。外国的卖家要支付买卖价格的15%(不是盈利的15%),交给联邦税局。可以在过户之后或者年底报税的时候,要求会计师报税时把多付的部分拿回来。或者如果有少付的话那他就要补上。

在纽约市购买投资房产的话,其实也是一个比较受到全世界投资人热衷的投资的方式。房产比较保值,,租金收入相对来说也是比较稳定的,在将来的话也是对这个房子的需求也是比较大的。但是提醒所有的外国投资人必须要跟他们的律师,会计师进行深入的讨论和咨询,关于这个在美国投资的好处,不好的地方以及所有的税务的后果。然后再确定说到底要不要购买,或者是签署合同。这才是一个信息全面的决定informed decision

real estate law and business law of counsel
June 6th, 2018|Uncategorized|