Can Non-Citizens Buy Property in the USA? Financing, FIRPTA, and Taxes

Yes, non-citizens can buy property in the USA. No federal law restricts real estate ownership based on citizenship or immigration status, and a foreign buyer can purchase a home, condo, or land in any state. What changes is everything around the purchase: how you finance it, how the IRS taxes the rent and eventual sale, and, most importantly, what happens to the property when you die. The federal estate tax exemption for a non-domiciled foreign owner is $60,000, compared with $15,000,000 for a citizen, and that gap catches most buyers by surprise.¹

State Restrictions to Check Before You Shop

Since 2021, roughly 25 to 30 states have passed laws limiting foreign ownership of land in some form. Most target agricultural land, and most focus on foreign governments or buyers tied to specific countries. A smaller number reach residential property. Some states ban certain foreign nationals from owning land outright; others simply require disclosure.

For a standard house or condo purchase in most markets, these laws are unlikely to affect you. If you’re looking at farmland or rural acreage, check the specific rules in the state where the property sits, because the picture has been shifting quickly.

Financing the Purchase

How easily you can borrow depends almost entirely on your immigration status.

Green Card Holders

Lawful permanent residents qualify for the same conventional mortgages as U.S. citizens and can also get FHA-insured loans if they meet the standard credit and income requirements.² In practice, a green card holder’s mortgage experience looks identical to a citizen’s.

Visa Holders and Non-Resident Buyers

If you hold a work visa, a student visa, or have no U.S. residency at all, the options narrow. FHA-insured loans are no longer available to non-permanent residents after a policy change that took effect in May 2025.² Conventional loans are possible but harder to secure without established U.S. credit.

The more common path is a “foreign national loan,” a portfolio product some U.S. banks keep on their own books rather than selling to Fannie Mae or Freddie Mac. Expect a down payment of 30% to 40%, higher interest rates, and documentation of income and assets from your home country. You’ll usually need a U.S. bank account before you apply, and your visa type can decide whether a lender will work with you at all.

Many foreign buyers skip lending entirely and pay cash. That also simplifies closing across time zones and international banking systems.

Getting a Taxpayer ID Number

Before you can close, file U.S. tax returns, or ask for reduced withholding on a future sale, you need a U.S. taxpayer ID. If you don’t qualify for a Social Security Number, you’ll apply for an Individual Taxpayer Identification Number (ITIN) using IRS Form W-7.³ A valid foreign passport is the simplest supporting document because it proves both identity and foreign status on its own.⁴

Form W-7 normally has to be attached to a federal tax return, but two exceptions cover real estate. If you’re taking out a U.S. mortgage, you can apply under the mortgage interest reporting exception. If you’re selling property subject to FIRPTA withholding, a separate exception applies. In either case, you submit the real estate documentation (like a sales contract or Form 8288-B) with your W-7 instead of a return.⁵

Processing takes about seven weeks, and nine to eleven weeks if you apply during tax season (January 15 through April 30) or from outside the United States.³ Build that timeline into your closing schedule.

Tax on Rental Income

If you rent out U.S. property as a nonresident alien, the income is taxed, but you have a choice. The default rule and the alternative produce very different bills.

The Default: 30% of Gross Rent

Without an election, the IRS treats rent as “fixed, determinable, annual, or periodical” (FDAP) income, taxed at a flat 30% of the gross amount collected. No deductions for mortgage interest, property taxes, insurance, repairs, or depreciation.⁶ A tax treaty with your home country may reduce that rate; without one, 30% of every dollar of rent goes to the IRS. Your tenant or property manager is generally required to withhold before paying you.⁷

The Net Income Election

Under Section 871(d) of the Internal Revenue Code, you can elect to treat rental income as effectively connected to a U.S. business. You then deduct ordinary expenses (mortgage interest, property taxes, insurance, management fees, depreciation) and pay tax only on the net profit, at the same graduated rates that apply to U.S. residents.⁸

For most rental properties, this cuts the tax bill dramatically. The catch: once made, the election stays in effect every year unless the IRS lets you revoke it, and if you revoke, you can’t re-elect for at least five years.⁸ You must file a timely, accurate U.S. return to claim it.⁶ Filing late or not at all forfeits the deductions.

Selling: FIRPTA Withholding

When a foreign person sells U.S. real estate, the buyer must withhold 15% of the gross sales price and send it to the IRS. This is the core of the Foreign Investment in Real Property Tax Act (FIRPTA).⁹ The 15% isn’t an extra tax; it’s a prepayment against the capital gains tax you actually owe. You report the true gain on Form 1040-NR and claim a refund if the withholding exceeds the tax due.¹⁰

If you expect the actual tax to be less than 15%, you can ask the IRS to reduce or eliminate the withholding by filing Form 8288-B before or at closing.¹¹ You’ll need an ITIN for this; if you don’t have one, attach the 8288-B to your W-7.¹²

FIRPTA withholding is waived entirely when an individual buys the property for personal use at a sales price of $300,000 or less. The buyer or a family member must plan to live there at least 50% of the days it’s occupied during each of the first two years after the purchase.¹³ This exception only removes the withholding; the seller still owes tax on any real gain.

The Estate and Gift Tax Trap

This is where foreign ownership gets genuinely dangerous, and where most buyers get caught off guard.

Estate Tax

When a U.S. citizen or permanent resident dies, up to $15,000,000 of assets can pass before federal estate tax kicks in.¹ For a nonresident alien not domiciled in the U.S., the exemption is $60,000. An estate tax return is required whenever the fair market value of U.S.-situated assets, real estate included, exceeds that threshold.¹⁴ The top rate is 40%, so a foreign national who dies owning a $1,000,000 U.S. home could leave heirs with a six-figure federal tax bill.

Some countries have estate tax treaties with the U.S. that grant a larger, pro-rata exemption. If your home country has no such treaty, the $60,000 is all you get. Check whether a treaty applies to you before buying at any significant price point.

Gift Tax

Gifts of U.S. real property by a nonresident alien are subject to federal gift tax.¹⁵ The annual per-recipient exclusion is $19,000 for 2026, the same as for citizens.¹⁶ But nonresident aliens get no lifetime exemption comparable to the citizen’s $15,000,000. Any transfer of U.S. real estate above the annual exclusion can trigger immediate gift tax of up to 40%.

If you’re married to a U.S. citizen, the annual exclusion for gifts to your spouse rises to $194,000 for 2026.¹⁶ The unlimited marital deduction that applies between two U.S. citizens does not apply when one spouse is not a citizen.

Should You Hold the Property in an LLC?

Many foreign buyers hold U.S. real estate through a domestic LLC rather than in their own name. An LLC can provide liability protection, simplify management from abroad, and, combined with certain trust structures, help address the $60,000 estate tax problem. The compliance cost is real.

A single-member LLC owned by a foreign person is treated as a “disregarded entity” for most tax purposes, but it still has to file a pro forma Form 1120 with Form 5472 attached each year, reporting transactions between the LLC and its foreign owner. Penalties for missing or substantially incomplete filings start at $25,000 per form and escalate the longer the failure continues. These returns cannot be filed electronically by foreign-owned disregarded entities; they must be mailed or faxed to a dedicated IRS address.¹⁷ Most foreign owners need a U.S. accountant to handle it.

An LLC doesn’t eliminate FIRPTA withholding or income tax obligations. Structuring around the estate tax problem is a complex, cross-border tax planning exercise, and it’s worth doing with a qualified attorney before you buy, not after.

Federal Disclosure for Agricultural Land

If you’re buying farmland, timberland, or any agricultural property of 10 acres or more, the Agricultural Foreign Investment Disclosure Act (AFIDA) requires you to report the purchase to the USDA’s Farm Service Agency within 90 days on Form FSA-153, filed at the county office where the land sits. Penalties for failing to report or filing false information can reach 25% of the fair market value of your interest. Late filings may be penalized at 0.1% of fair market value per week, also capped at 25%.

Leaseholds under 10 years and interests held purely as debt security are exempt. Residential buyers in suburban and urban areas won’t run into AFIDA, but the definition of “agricultural land” is broad enough to catch hobby farms and wooded parcels.

Local Property Taxes

Every property owner in the United States pays local property taxes regardless of citizenship. Counties or municipalities assess them based on the value of the home and land. Effective rates vary widely, generally from under 0.3% to over 2% of assessed value depending on the state and locality. There is no federal property tax exemption tied to citizenship, and failing to pay can eventually produce a tax lien or forced sale.

If you live abroad and rent the property out, a property manager or local representative should handle these payments on your behalf. Property tax bills come due whether the property is generating income or not.

1
Internal Revenue Service. What’s New — Estate and Gift Tax
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HUD. Revisions to Residency Requirements
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Internal Revenue Service. Individual Taxpayer Identification Number (ITIN)
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Internal Revenue Service. Instructions for Form W-7 (Rev. December 2024)
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Internal Revenue Service. Instructions for Form W-7 (12/2024)
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Internal Revenue Service. Taxation of Nonresident Aliens
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Internal Revenue Service. NRA Withholding
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Office of the Law Revision Counsel. 26 U.S. Code 871 – Tax on Nonresident Alien Individuals
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Internal Revenue Service. FIRPTA Withholding
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Internal Revenue Service. About Form 1040-NR, U.S. Nonresident Alien Income Tax Return
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Internal Revenue Service. About Form 8288-B, Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests
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Internal Revenue Service. ITIN Guidance for Foreign Buyers/Sellers of U.S. Property
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Internal Revenue Service. Exceptions from FIRPTA Withholding
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Internal Revenue Service. Some Nonresidents with U.S. Assets Must File Estate Tax Returns
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Internal Revenue Service. Gift Tax for Nonresidents Not Citizens of the United States
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Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
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Internal Revenue Service. Instructions for Form 5472