International Investors In NYC
If you are interested in purchasing investment property, NYC is a great place to look. As an international buyer who is interested in making a property investment in New York, however, it is beneficial to gain a better understanding of the process and the special circumstances that apply to international buyers.
Co-Op or Condo?
When it comes to investment property, NYC is divided into two major categories for foreign investors: co-op apartments and condominiums. For investors without US residency, purchasing a condo is generally the better option. This is because the requirements for purchasing a co-op are quite complicated for foreign nationals, with only 5 percent of co-op buildings being investor-friendly. Condos, on the other hand, offer the following benefits over co-ops:
- Board approval is not required for condos
- Buyers generally do not have to submit detailed financial, tax and personal information with a condo
- Condos typically have fewer restrictions for use, as they can be purchased for children or used as a pied-a-terre
- Condos are easier to sell
With most new buildings constructed in New York over the past 20 years being condos, you are also more likely to find a newer condo to purchase than a newer co-op apartment.
Setting Up a Legal Structure
As a real estate investor, you will need to set up the proper legal structure for your business. For investment property, NYC is no different from any other state in the country in terms of legal structure. Generally speaking, an LLC is the best legal structure for investors. To set up an LLC, you will need a New York real estate attorney as well as a real estate broker and possibly a CPA.
After the structure is established, you will need to file a tax return for the LLC each year. As part of this process, you will need to claim your rental income. Your rental income is based on the total revenue generated from the property minus expenses. Expenses that you can deduct include mortgage fees, property taxes and costs associated with maintaining the property You can also deduct other expenses associated with overseeing the property, such as travel expenses related to the property and fees for services such as property management.
When it comes to investment property, NYC also charges annual real estate taxes in addition to federal taxes. Before purchasing a property, you should check both state and federal taxes to ensure they have been paid as required and to get an idea of how much you can expect to pay each year on that property.
When purchasing investment property, NYC is no different from any other state in the country. As a foreign investor, you will need to provide documents from your country of origin in order to prove that you have sufficient income to cover your mortgage expenses. Requested documentation may include multiple credit references, verifiable proof of employment and proof of ability to pay closing costs. You will also be asked to provide documents to verify your identity, such as a passport and visa, along with a down payment. While a down payment of 10 to 20 percent is standard in the United States, foreign investors are often asked to make a down payment of 40 percent or more.