Advice and Help if you are thinking of Buying a Property in USA (United States of America)
1. What is your total budget?
How much money do you have to spend on your property, the property buying process – including fees – and its ongoing upkeep and maintenance?
2. How will you fund the property purchase?
Do you plan to buy your US property with a mortgage, by releasing equity from another property, or with cash?
If you are looking to take out a mortgage as a non-resident, it is worth noting that mortgage availability is nowhere near as good as it once was. Lending conditions have tightened considerably in recent years. So many overseas property buyers time their US mortgage application wrong and end up not being able to get a mortgage for at least two years. No lenders in the USA will lend until they have established a credit history – which takes around 6-9 months – and they need to have two years of USA tax returns. What you need to do as an international buyer is get a foreign national mortgage before you buy take the drastic steps of buying the property, giving up your job, and preparing to move to the US.
It is undoubtedly for this reason that most non-resident foreign buyers made an all-cash purchase (72 percent) in 2017. Mortgages are more readily available for residents of the US, but achieving residency in the first place is a whole other mission.
Most mortgages in the USA are only offered on a repayment only basis, the maximum term is 30 years, and interest rates and loan terms will vary depending on the property type and its exact location. However, average fixed-rates haven’t been more than 4% for almost two years, although could rise at any time. It is important to remember that each state will have different rules regarding how much you can borrow and, indeed, whether you even can. You will also need to assess how much your mortgage repayments will be and if you will be able to afford this.
3. Have you factored in all additional costs? 
Including property viewings and visits to the country prior to buying the property, along with realtor fees, legal fees, taxes, and exchange rates when moving money between countries. Hidden costs – or extra costs – of buying a home in the United States include independent legal fees (around 1 percent); closing costs – including fees, taxes and deed stamps (around 2-4 percent); home inspection and surveys (several hundred dollars) and realtor fees (most seller’s will pay the realtor, but sometimes the fee will be split, or at least partially split, between both parties). On top of this, you may also need to pay a mortgage broker fee if you are borrowing to fund your purchase.
4. Have you considered the effects of currency market movements on the price of your property?
If you are buying the US property internationally, the price of your property in US Dollars will change depending on how the currency exchange market moves during the purchase process. Consulting a currency specialist early on in your property research process means you can keep an eye on exchange rates and factor in the price difference and all associated international costs.
You can protect the price of your property and any other international money transfers you need to make using specialist currency tools to lock in a favourable rate for a planned future payment. These are called Forward trades and are a very useful budgeting tool for any large international payments and purchases.
We recommend opening an account with Halo Financial as soon as you know you want to buy property in the US, to access currency insights and stay on top of the currency markets. By enlisting the services of one of their Currency Consultants, you can take advantage of all their expertise and numerous resources to help you plan your transfer around the continually fluctuating currency market. They can help you plan the right time to suit you for your international money transfers and find the best rate for your specific currency transfers to and from the US, protecting you against currency risk and also saving you money through better exchange rates and no hidden fees or commission payments.
5. How will you pay the ongoing costs associated with owning a property in the United States?
You will need to ensure any regular bills and mortgage payments are covered and factored into your budget, as well as ongoing maintenance, amenities, and additional property costs for upkeep. Remember that if you are paying these in another currency, the same currency market movements will affect the price of these payments. Consider any recurring and regular payments and discuss how you could potentially save time and money on these with a currency specialist.
6. Do you have reliable estimates for removals and shipping costs?
If you are moving to the United States permanently, you will need to ensure that these are included in your overall budget. Find a professional relocation and removals firm to give you a quote. If you are purchasing a home for investment purposes, and therefore not planning on moving any belongings to the country, then you will need to ensure that the house you buy is furnished or budget to furnish it once you have bought it. Unfurnished homes command less rental value than furnished ones, and are therefore harder to find tenants for.
8. Do you have a bank account in America?
Although many American banks prefer their customers to have a Social Security Number (for which you need to be based there) some banks do offer opportunities to open a US account at an overseas branch and then transfer your money between your existing account and your new US Dollar account. Banks with a significant global presence are particularly good for doing this. The criteria you will need to meet to open an American account at an overseas branch will depend on your country of origin and the bank. You will also probably be subject to fairly high fees. We also recommend keeping your UK account open alongside it, to ensure that you can continue to manage any financial obligations in the UK.
It’s a good idea to make sure you open this bank account as soon as you know you will be moving to the US, as this will ensure that your process moves more efficiently – you will be able to transfer money quickly and set up direct debits and standing orders as soon as you need to.
Halo Handy Hint
If you are looking to open a US account as a non-American resident, make sure you only use an official bank. There are companies on the Internet that will promise to open a bank account in the States for you, but many of these companies are scams and should be avoided at all costs. If you do achieve American residency, and possess a Social Security number, opening an account is extremely straightforward, providing you can provide official ID (such as a passport), proof of address, and your SSN.
9. Have you thought about how you will manage salary or pension payments?
Many expats or people planning to emigrate to the US don’t realise that when the move to the USA they can’t use a UK financial advisor anymore. They will need to work with a u US- based advisor, so they need to be able to locate an advisor in the US that has a knowledge of the UK tax and pension system. These are few and far between. We recommend speaking to an advisor who is qualified in both your original home country and in the USA, who can advise you on all complex matters such as mortgages, pensions and taxes and your liabilities within and outside the USA.
Moving to the USA from the UK
If you are moving to the United States long-term, ensure that your salary or pension can be paid directly to you. Unfortunately, while there are American pension plans that are classed as having Qualifying Recognised Overseas Pension Regime (QROP) status, it is not possible to transfer rights in UK pension schemes to them. This is because US plans that are tax-qualified — in other words, approved — under US tax laws cannot accept transfer payments from foreign plans. At the same time, the UK insists that UK schemes may only transfer to plans with local tax approval.
Many British people who retire to the United States decide to continue drawing their pension through the UK scheme and have it converted into Dollars. Due to the US and UK having a double tax treaty, a pension from a UK scheme paid directly to a US resident would only be applicable for tax in the US. It is essential to seek expert advice from an independence pensions/financial expert before taking any action regarding financial issues.
It is essential to seek expert advice from an independence pensions/financial expert before taking any action regarding financial issues.
10. Salary and tax in the US
The average individual salary in the US in 2018 is approximately $59,055.
Taxation is notoriously complicated in the USA. It’s a progressive system, so it is updated annually as US income rises. There are currently seven Federal tax brackets:
| Federal tax brackets: 2017 tax brackets (to 17th April 2018) | ||
|---|---|---|
| Tax rate | Single | Head of household |
| 10% | Up to $9,325 | Up to $13,350 |
| 15% | $9,326 to $37,950 | $13,351 to $50,800 |
| 25% | $37,951 to $91,900 | $50,801 to $131,200 |
| 28% | $91,901 to $191,650 | $131,201 to $212,500 |
| 33% | $191,651 to $416,700 | $212,501 to $416,700 |
| 35% | $416,701 to $418,400 | $416,701 to $444,550 |
| 39.6% | $418,401 or more | $444,551 or more |
| Tax rate | Married filing jointly or qualifying widow | Married filing separately |
| 10% | Up to $18,650 | Up to $9,325 |
| 15% | $18,651 to $75,900 | $9,326 to $37,950 |
| 25% | $75,901 to $153,100 | $37,951 to $76,550 |
| 28% | $153,101 to $233,350 | $76,551 to $116,675 |
| 33% | $233,351 to $416,700 | $116,676 to $208,350 |
| 35% | $416,701 to $470,000 | $208,351 to $235,350 |
| 39.6% | $470,001 or more | $235,351 or more |
| Federal tax brackets: 2018 tax brackets (to 15th April 2019) | ||
|---|---|---|
| Tax rate | Single | Head of household |
| 10% | Up to $9,525 | Up to $13,600 |
| 12% | $9,526 to $38,700 | $13,601 to $51,800 |
| 22% | $38,701 to $82,500 | $51,801 to $82,500 |
| 24% | $82,501 to $157,500 | $82,501 to $157,500 |
| 32% | $157,501 to $200,000 | $157,501 to $200,000 |
| 35% | $200,001 to $500,000 | $200,001 to $500,000 |
| 37% | $500,001 or more | $500,001 or more |
| Tax rate | Married filing jointly or qualifying widow | Married filing separately |
| 10% | Up to $19,050 | Up to $9,525 |
| 12% | $19,051 to $77,400 | $9,525 to $38,700 |
| 22% | $77,401 to $165,000 | $38,701 to $82,500 |
| 24% | $165,001 to $315,000 | $82,501 to $157,000 |
| 32% | $315,001 to $400,000 | $157,001 to $200,000 |
| 35% | $400,001 to $600,000 | $200,001 to $300,000 |
| 37% | $600,001 or more | $300,001 or more |
Find out more about taxes in the US or get in touch with a recommended tax expert.
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