Buying property in USA non-US resident

[Happy]

No first hand experience but one who lived and owned property spoke about peculiar responsibilities of US owners.

Thing that scared me most was ANNUAL TAX plus service charges.
Here in Australia tax is on purchase, sale and has payments regarding services you use or can use.

Their annual tax is on property and because I wasn’t too interested, I forgot what was basis of the tax. Was it value, replacement value or level of tax was set by local authority no idea.
What I was told that people madly renovated, re-painted, and changed things because all dockets could be presented to lower the tax.
Comment was that there were not many run down properties, because of all the money that otherwise would have to be paid anyway.

Again no idea if it was like in Australia or any other method of tax claim, but it was quite an industry not to mention that even low level of fraud was rife, known by authorities but blind-eyed to some extent.

Don’t have currently contact, so cannot ask for details.

Ah, and big welcome to all new posters!

 

[DavidGKarp]

The property tax paid by property owners in the US varies by County to County within each state, so there is no average rate to quote. Best idea is to consider a city/market then research the counties that comprise that city. For example, I live in Charlotte, North Carolina and there are approximately 13 counties that make up the Charlotte metro area and surrounding suburbs. The predominant county is Mecklenburg, where the property tax rate is $1.297 per $100 of property valuation. The county I live in is Union county, where the property tax rate is $0.74 per $100 of property valuation. Interestingly, the school district in Union is considered far more highly than that for Mecklenburg. So, as people move to Charlotte, they are picking Union County over Mecklenburg County for both the quality of the schools and the considerably cheaper property taxes.

So, in North Carolina, the property tax bills are sent out September 1st and are paid in one lump sum for that entire year. Interestingly, the County files a tax lien on the property on January 1st of that year. This lien takes precedence over all other liens, should the owner not pay.

The property valuation is done by the County based on size of the property, size of the house, building material and any additions/modifications to the house. With the property values declining, some people are contesting the tax value the County is placing on their property.

Property taxes are tax deductible at tax time.

Hope that helps.

David Karp

 

[DavidGKarp]

I should have added that there are taxes on the income earned from renting out the investment property, but like Australia, there are deductions to offset that. Best to speak with a tax specialist here. I know of a few good ones.

Regards
David Karp
davidkarp@walkaboutpropertiesusa.com

 

[Happy]

...
Property taxes are tax deductible at tax time.

Hope that helps.

David Karp

Was it then taken into account that somebody painted external walls and purchase price of paint and brushes were deducted from tax, or other method of tax deduction was used?

Suppose this varies state by state and county by county too?

 

[wintech]

Property tax / annual rates

I was under the understanding (probably mistakenly) that the property tax in the states is similar to rates that dwelling owners pay in Australia. The only difference being that the USA Gvt call a spade a spade whereas Oz Gvt flirts with semantics. Anything that the Gvt takes from a citizen to fund services is a tax, call it what you will - levy,duty,fees, etc all taxes.

 

[DavidGKarp]

Was it then taken into account that somebody painted external walls and purchase price of paint and brushes were deducted from tax, or other method of tax deduction was used?

Suppose this varies state by state and county by county too?

General house maintenance and repairs and upgrades are not tax deductible. There are some types of upgrades that are, for example where the heating/cooling system is upgraded from some old system to a fuel efficient one, or putting solar panels on. And yes, that taxes do vary county by county and state to state.

Regards

 

[Julia]

David, with apologies for somewhat deviating from the thread content, and no obligation for you to answer, of course, could you say how you as an Australian came to be engaged in your present occupation?

 

[DavidGKarp]

Julia - I started my business to help Australian's buy US investment property earlier this year. I had obtained my real estate broker’s license in the Carolina's last year.

I thought that Australians would be more comfortable working with an Australian who is physically located here in the US. I have also lived and worked throughout much of the States, so I feel that I can give first hand advise on good areas to consider.

I had been buying and selling residential property, both to live in and for investment, for over 20 years now. My career in Australia (civil engineer - worked on the Shangri La Hotel in Sydney and sections of the new Hume Highway south of Goulburn) started my interest in real estate and construction. Then coming to the States in 1995 to work in telecommunications (managing the acquisition and building of cell sites for Bell South and Sprint) further developed that interest in real estate. I have held a number of other positions with Jones Lang LaSalle, the American Red Cross and currently with Bank of America - all roles that involve real estate in some form or another.

I hope that helps explain the path taken.

Regards
David Karp

 

[Joe Blow]

Hi David, just a reminder that your contact details can only be posted in your signature. We do not allow ASF members to link to their website in posts on the forums as spam is a huge problem for us.

You can edit your signature here: https://www.aussiestockforums.com/account/signature

 

[DavidGKarp]

Thanks Joe for the reminder. I have taken care of that now.

 

[Glen48]

It's kind of a hard to have a market
when no one knows who really owns
what.

And that's where were are now
in the US real estate market.

Video:

http://www.realecontv.com/page/5548.html

 

[Happy]

I would still be hesitant to get a property so far away, where any and every little thing has to be done by hired person.

Know fellow from Victoria that had property in QLD and one of more sticky issues was 3-monthly or so plumber charge for washers replacement, with roughly $30 or $40 labour component.
Not much we might say, but it was almost like clockwork.

He tried to argue that, why his washers last for 3 to 5 years, yet in rental property washers are leaking so quickly.
In the end did not get anywhere, there were other issues like walls repair and painting, revolving tenants, carpet problems and on and on.

I know not all distant location rental properties give the same problems, but some do.

 

[Glen48]

A couple of trips to USA and connecting flights , lost work , jet lag etc would knock a lot of gloss of a bargain in a market that has not bottomed and more importantly who knows if it will rise again.

 

[tbrittin]

Great topic and there are lots of good questions here. We have been helping Australians purchase property in Michigan for over a year now. We certainly have heard our share of horror stories from various Aussies who have gone about purchasing without being fully informed and really got in over their head.

Before you decide to purchase a property in the US, you need to do your homework and work with an experienced team on the ground. This is vitally important because you are investing from so far away.

Because I have seen so many go about it the wrong way, we have taken an active approach to try and educate our clients on how to purchase property in the US the right way. We have a myriad of information on our website and our blog to help you with your investing activities in the US. In fact, we're in the process of publishing a series of blog posts talking about how to purchase properties in the US the right way. You can access these posts on our blog from the link in my signature.

If you have specific questions about purchasing property in the US, I would be glad to help...just PM or email me.

Cheers!

 

[ooj100]

Anyone bought US Property as an investment and being a non-us citizen? What are the drawbacks ? and is this possible ?

It is definitely possible. I bought a house in Illinois State for a few thousand as a long term bet on the housing markets have. Drawbacks are same as owning property in any overseas country. State, county taxes are a little high for my comfort though...

 

[Bill M]

I am not following the thread but thought I would mention what I saw on the Today Tonight program this evening. There are quite a number of Aussies buying property over there and some buying 40 to 50 houses and in some cases whole streets. 42% and 48% returns in rents alone for some of the properties.

I just wish I had the nerve and time to investigate this. It sounds like good investing. From the program:
---
The total cost was $25,000. The rent is $900 a month. That’s a return is 42.3 per cent.

"Prices in the US at the moment are down about two thirds in some of the really bad states, and heading lower," McKnight said.
---

Link to program here:http://au.news.yahoo.com/today-tonight/consumer/article/-/12548104/buying-up-the-usa

 

[Julia]

Bill, I cannot now remember enough to find a link for you, but a few months ago there was a very interesting article I read (probably in The Australian or its magazine) which laid out some of the horrible problems of being a landlord in the US. I think it was mostly with reference to Detroit and perhaps the horror that was described isn't replicated in other areas.

However, the main reference was to federal laws about evicting tenants, no matter what they do, regardless of their not paying rent etc., and I remember thinking, hell, I wouldn't be in that for anything, despite the potential capital gains.

 

[Bill M]

However, the main reference was to federal laws about evicting tenants, no matter what they do, regardless of their not paying rent etc., and I remember thinking, hell, I wouldn't be in that for anything, despite the potential capital gains.

That's why I said I don't have the nerve. I also heard of a case of an Australian owning an apartment block. Apparently he was a very good landlord, so the tenants said. He was friendly and fixed what needed fixing. One day a car pulled up beside him and the people inside opened fire and shot him dead. I don't have the links but I remember the story well, early last year I think.

Edit: I Just found the link. Respect to the family.
http://www.theage.com.au/national/aussie-landlord-believed-in-the-american-dream-20110516-1ep6q.html

 

[Glen48]

US House prices still have 20-30% to fall, some counties are pulling out street light to save money which means go out at night so less spending in shops etc all you can hope for is a good return until the house is destroyed'

 

[petertasman]

Re: Buying property in USA non US resident

The real question is not should you invest in the USA in places like Phoenix. However, how do you borrow in the USA.

Hi Oliboy

Funding is difficult for international investors in the US, with loan size a problem for most of our cash flow positive properties. i have one funding source we are taking our clients through at the moment, though they will only fund in personal names. There are more lenders in Florida willing to back overseas investors.

Rates are comparable to Australian rates, due to the credit market being so risk adverse and loans being issued outside of traditional bank lenders. Most of our clients are buying with cash, super or from lines of credit on Australian property.

We are experiencing some investor competition for our target properties in Phoenix and Atlanta and this is causing a strengthening of prices. The US recovery appears to progressing ahead of schedule, with GM repaying $8 bil US to the government and opening new plants. I would expect capital growth to increase in momentum by 2011, particularly where we have greatly reduced assets, like the homes we are buying in Atlanta at 15-20% of their former value. The cost of construction is many times the purchase price and population growth will place pressure on prices as new construction becomes necessary.

Waiting for growth is not difficult when you are receiving a net return of 15-25%, and you can buy an amazing quality home for very little at the moment.

Please contact me direct if you have further questions.

Vincent Selleck
US Buyers Agent - 888 Wealth Creation