Gray Stuart – UNITED STATES

From our international offices and our local partners on the ground in United States we help international clients with the following services.

 

Buying the Best Property in United States

United States is probably the most diverse property market in the World with a wide ranging markets within markets. New York, Washington DC, Seattle and Los Angeles are the major business hubs and these markets are like any capital city in the world from an investment point of view. You then have lifestyle property areas such as San Francisco and San Diego in California to Miami and surrounding Florida areas. Finally, you have the cities and places in between such as Chicago and Cleveland. First Celtic is very much focused on Florida and California for lifestyle properties and New York for Investment.

Setting Up a Business in Untied States

V

ery simply our professional directors can help you with the set up your company structures in the most tax efficient manner possible. We only use the very best Lawyers, Accountants and professional advisors to make sure your company structure is 100% safe and secure and the very best you can have in United States.

 

Asset Management

If you’re an investor and already own assets in USA or just acquiring them then our team of professionals can offer you the complete asset management services including property management and project management. These are just a sample of the key services that Gray Stuart United States provides and should you need any further information do not hesitate to contact us directly.

Gray Stuart USA

Tel:         +44 20 7588 8355

Email     usa@graystuart.com

Why Invest in United State Property?

Last updated March 2019

The USA economy is currently booming and the same applies for the property market in the United States and represents excellent investment opportunities. However United States is probably the most diverse property market in the World with a wide ranging markets within markets. New York, Washington DC, Seattle and Los Angeles are the major business hubs and these markets are like any capital city in the world from an investment point of view. You then have lifestyle property areas such as San Francisco and San Diego in California to Miami and surrounding Florida areas. At First Celtic we focus on both Investment and lifestyle property purchases it’s just important to realize the difference.

USA PROPERTY MARKET

After five years of strong house price growth, the U.S. housing market remains surprisingly vibrant. Demand remains robust, and residential construction activity continues to rise.

The S&P/Case-Shiller seasonally-adjusted national home price index rose by 6.21% during the year to November 2017 (3.91% inflation-adjusted), its strongest y-o-y growth since June 2014. This was supported by Federal Housing Finance Agency’s seasonally-adjusted purchase-only U.S. house price index, which rose by 6.54% y-o-y in November 2017 (4.24% inflation-adjusted), a slight increase from y-o-y rises of 6.44% in November 2016 and 6% in November 2015.

All 20 major U.S. cities experienced relatively strong house price hikes, according to Standard and Poor’s, with Seattle posting the highest increase of 12.71% during the year to November 2017, followed by Las Vegas (10.6%), San Francisco (9.04%), San Diego (7.45%), Los Angeles (7.02%), Tampa (7.02%), and Dallas (7.02%). Strong house price rises were also registered in Detroit (6.98%), Denver (6.94%), Portland (6.94%), Boston (6.26%), Charlotte (5.76%), New York (5.71%), Phoenix (5.54%), Minneapolis (5.41%), Atlanta (5.14%), Cleveland (4.13%), and Miami (4.06%).

The average sales price of new homes sold in the U.S. rose by about 4.3% y-o-y in December 2017, to US$398,900, according to the U.S. Census Bureau. On the other hand, the median sales price of new homes sold increased by a more modest 2.6% to US$335,400 over the same period.

For existing homes, the median price was up 5.8% to US$246,800 in December 2017 from a year earlier, according to the National Association of Realtors (NAR). December’s price increase marks the 70th consecutive month of year-over-year gains.

TAXES IN UNITED STATES

Rental Income: Rental income is categorized as either Effectively Connected Income, wherein it is taxed at progressive federal tax rates, or Fixed Determinable Annual Periodical income, wherein it is taxed at 30% withheld by the tenant.

 

States also levy income taxes at varying rates so depending where you’re going to invest its best to consult with First Celtic so you know your full tax position at the start.

Capital Gains: Capital gains tax for properties held for more than a year is 5%; otherwise the tax is 15%.

Inheritance: Federal estate tax is progressive with rates at 18% to 45% and an exemption of up to US$2,000,000. A Generation-Skipping Transfer Tax is also being levied on transfers to beneficiaries who are more than one generation younger than the transferor.

Residents: Resident foreigners, like U.S. citizens, are taxed on their worldwide income.

 

WHAT TYPE OF PROPERTY INVESTMENTS ARE AVAILABLE IN USA?

For the would be property investor there is a wide range of different types of property investments that include the following:

  • Residential Buy to Let Properties
  • Commercial Investment Properties
  • Commercial Business Properties such as Hotels
  • Holiday Resorts
  • Fractional Ownership products
  • Guaranteed Rental products

Depending on what type of investor you are be it commercial, residential or lifestyle property investment the United States has something for everybody with above inflation investment growth.

INVESTMENT CONCLUSIION

In the short term investing in United States is more about Capital Growth than Yields and Income. There are excellent opportunities to be had in both the commercial and residential sector and with roundtrip buying costs of around 12% {differs State by State} there is room to make good profits in the short term as well as long term. On the commercial side most investment opportunities are off market and in the USA most of First Celtic current business is Lifestyle property purchases in California and Miami.

The Buying Process in the United States

Roundtrip transaction cost is around 9% to 11%. Significant costs include the 6% real estate broker’s fee and real property transfer tax, at around 1.425% in New York City. Total costs for legal fees, title search and insurance, and registration fees range from 1.70% to 3.50%. However, you need to bear in mind that the United States is like 50 different countries with each state applying its own taxes so rates will change depending on which State you buy property in.

There are minor restrictions on foreign ownership of real estate in USA but they are insignificant for buy-to-let investment purposes. At the federal level there are only a few restrictions on non-resident aliens (NRAs) owning or investing in real property (the Agricultural Foreign Investment Disclosure Act of 1978 (FIDA); The International Investment Survey Act of 1976 (IISA); The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA)). For practical purposes these restrictions are unimportant. In Oklahoma, foreigners are not allowed to buy land but they can buy condominiums.

Specific procedures vary from state to state, as well as between counties and cities. The procedure below is followed in New York City.

Make an offer orally through your agent, who will convey it either to the seller’s agent or to the seller directly. The seller may counter your offer, beginning a negotiation process that, hopefully, will lead to an agreement on price, terms, and closing date.

The seller’s attorney begins preparation of the contract of sale. He or she obtains and reviews the following documents: the deed, survey, title insurance policy, promissory notes or mortgages on the property, certificates of occupancy, tax bills, fuel and utility bills, leases, permits for elevator, pools, etc.

Meanwhile your attorney (a real estate attorney is required in all property transactions in New York City) examines the financial condition of the condominium where you want to buy.

The buyer’s attorney reviews and negotiates the contract deed, title search and title insurance policy, as well as the documents referred to in the title policy, such as survey, certificate of occupancy, real property tax bill, heating, cooling and electric bills. After your attorney concludes that the condominium’s financial condition is satisfactory, that the by-laws of the building are acceptable to you, and that the contract of sale is also acceptable, he will allow you to sign the contract. You will then usually be required to present a deposit of 10% of the purchase price.

The contract plus the deposit will then be forwarded to the seller for signature. This money will be held in the seller’s attorney’s escrow account until closing. It is important to note that until all parties have signed the contract, and it has been delivered, the seller can still entertain and accept other offers.

You will then receive from your real estate agent the board requirements and application materials. For condominiums, the sale is conditional upon the Board of Managers’ Waiver of the Right of First Refusal approving the purchaser, unless you are purchasing directly from the developer. Your purchase contract will stipulate that you must promptly submit your application for board approval after the issuance of a financing commitment, if any. You must cooperate with the condominium board requests, and provide any documentation it requires to issue the waiver. The required materials typically include: an application, a financial statement signed by a Certified Public Accountant, all requisite support for your financial statement, three years of tax returns, bank statements, letters of personal and financial reference, letters of professional reference, the contract of sale, bank documents (if necessary) indicating that your loan is in place, etc.

Your application will be reviewed, and if all required materials are included and in order, an approval is typically granted. After which you can proceed with the closing ceremonies.

Closing practices are dictated by custom, and vary from region to region. Generally, all necessary parties are present, their identity is verified, the documents are finalized, financial calculations and adjustments are reviewed and documents, money and information are exchanged. The closing usually takes place at the office of the seller’s attorney, but occasionally at the office of the lenders’ counsel. Various costs are payable at closing, which vary according to jurisdiction.

The purchaser typically pays fees to record the deed and the mortgage, utility bills, escrow fees, bank attorney’s fee, taxes, special assessments, financing charges, inspection fees, origination fees, adjustments and other fees that may be imposed by the state and local government.

In order to protect a purchaser or lender from third party rights over the real estate, it is advisable to instruct your lawyer to record the relevant documents by filing in a public recording office, usually a country office.

Recording Fees:

Recording fees are charged by the government for entering an official record of the change of ownership of the property. It can be paid by either party but is usually paid by the buyer. Recording fees are usually fixed amounts and are minimal.

Legal Fee:

Attorney’s fees may vary depending on location and the complexity of the transaction. Most lawyers charge a percentage of the selling price, about 0.5% to 1%, while some lawyers charge a fixed fee or on an hourly basis. Each party pays for their own lawyer.

Real Property Transfer Tax (RPTT)

Transfer tax varies depending on the location of the property. Five states do not impose transfer taxes (Mississippi, Missouri, New Mexico, North Dakota and Wyoming). The National Association of Realtors has a list of the amount of real estate transfer tax imposed by different states.

In New York City, the real property transfer tax is levied on sales or transfers of property and the tax rate varies, depending on the property value and property classification.

NCY REAL PROPERTY TRANSFER TAX – RESIDENTIAL PROPERTY

TAXABLE INCOME, US$ TAX RATE

Up to US$500,000            1%

Over US$500,000              1.425%

We have used New York as an example to give you a basic idea but as mentioned above the amount paid will differ from State to State. First Celtic can advise you specifically in each state of USA and refer you to a Lawyer to assist you in that State.

United States Location Guide

The United States of America is without doubt the most diverse and stunning country in the world, in reality its 50 countries under one roof. For example, you have Hawaii in the Pacific Ocean that is always Hot and Alaska which borders North Canada which is always cold. Then you have some wonderful major cities of the world that include Washington DC, New York City, Los Angeles and Seattle. If you are looking for a warm climate, then Florida and California should be your preferred destination and probably the most international and welcoming for international visitors. Then you had the mid-western states such as Nebraska and Wyoming that have stunning attractions. USA truly has something for everyone.

California is one of the few places in the world where you can Ski in the morning and be on the beach in the afternoon. So if you can’t find what you want in USA it probably does not exist.