Get all your investment questions answered here
Check out our FAQs for basic information and important tips.
What about aftercare after the investment, such as home maintenance, maintenance management, and tenant management?
- We offer Property Management Services and Post Closing Services to help protect your assets and maximize your returns throughout the life of your investment.
- Turnkey Global Realty’s Property Management Professional Team utilizes a pool of specialized contractors in each field, accumulated through years of experience, to provide complete maintenance management services for your property. Our Property Management Professional Team will screen tenants through a systematic verification process, complete strict lease agreements with complete regulations, and conduct pre-inspections before tenants move in to ensure that your investment property is safe and secure.
- And with our Post Closing Service, we provide all the services you need after closing, the final step in the real estate acquisition process. For new homes, we provide practical and essential services such as registering and requesting free repairs, connecting you to the utilities you need, and taking care of any necessary government services.
Can I get the same real estate benefits as Americans as a Korean?
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The United States actively welcomes foreign investors to own real estate, and you can enjoy most of the benefits associated with buying property in the United States even if you don’t have citizenship or permanent resident status. In the U.S. real estate market, foreign buyers have the same rights as U.S. buyers, as long as they meet the legal and tax requirements. However, it’s important to be aware of a few key points.
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The right to buy real estate
The United States does not restrict foreigners from owning real estate, so you can own a variety of assets, including residential and commercial real estate. The process is the same as for U.S. buyers, and there are no restrictions on the purchase process. -
Mortgage loans
Foreign nationals can obtain mortgage loans through financial institutions in the U.S. However, they typically require a higher down payment percentage (typically 30-50%) and slightly higher interest rates than U.S. citizens. Also, if you have a poor credit history, you may be required to provide additional collateral along with proof of income. -
Tax and legal considerations
- Property taxes: If you own real estate, you’re required to pay property taxes every year, and the rate can vary depending on your location.
- Capital gains tax: You are taxed on capital gains when you sell real estate, and additional tax withholding rules (FIRPTA) may apply for foreign investors.
- Tax reconciliation with South Korea: International property owners are required to report according to South Korean tax laws and may be subject to comprehensive income tax, including rental income, if any.
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Seek professional help
The U.S. real estate market can have complex legal and tax requirements, and it is recommended that you seek the assistance of a professional, such as an attorney, real estate professional, or tax advisor. This is essential to reduce any unnecessary risks that may arise during the real estate purchase process and to protect your rights as an investor.
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What is a 1031 Exchange?
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A 1031 exchange is a provision of the United States Internal Revenue Service (IRS) tax code that allows you to defer capital gains taxes on the sale of real estate held for investment or business purposes if you sell the property and reinvest the proceeds in another property of a similar nature. This gives you the opportunity to grow your assets through reinvestment instead of paying taxes immediately.
Successful completion of this course requires adherence to specific time constraints and regulations, and must be done through a Qualified Intermediary (QI).
What are the taxes in the US?
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In the United States, taxes related to real estate transactions and ownership are levied at both the federal and state levels. The main taxes include
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Income Tax
- You’re taxed on the profit (capital gain) that you make when you sell your property.
- Short-term capital gains tax: Held for one year or less, at regular income tax rates
- Long-term capital gains tax: 0%, 15%, or 20%, depending on income level, if holding period exceeds 1 year
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Capital Gains Tax
- Charged on gains from the sale of real estate
- Applied to sales price minus cost (purchase price, improvements) and other expenses
- You can utilize a 1031 exchangeto defer taxes
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Property Tax
- Property owners pay property taxes to their local government (county or city) every year.
- Tax rates vary by region and are based on the property’s assessed market value
- Taxes fund community operations like public schools, roads, and public services.
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Transfer Tax
- Taxes on title transfers in real estate transactions
- Amounts vary by state and city and can be a fixed amount or a percentage of the transaction amount.
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Rental Income Tax
- Revenue from rentals is taxable
- Some expenses are deductible, such as mortgage interest, insurance, maintenance, etc.
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FIRPTA tax for foreign investors
- Foreigners selling real estate in the U.S. are subject to the Foreign Investment in Real Property Tax Act (FIRPTA), which requires
to withhold up to 15% of the sales proceeds.
- Foreigners selling real estate in the U.S. are subject to the Foreign Investment in Real Property Tax Act (FIRPTA), which requires
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Other considerations
- State taxes: Some states charge additional income or transaction taxes.
- Estate and gift taxes: Additional taxes may apply when you inherit or give away property
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I've heard that if a foreign national owns U.S. real estate, there is withholding on rental income.
How can I get the same tax benefits as Americans?
How can I get the same tax benefits as Americans?
- If you hold U.S. real estate as a foreign national, you are subject to a 30% withholding on rental income.
However, if you get a taxpayer number and file your taxes like an American, the 30% withholding tax is
eliminated, so you can take tax deductions on your rental income just like Americans.Foreign income is broadly categorized as FDAP (fixed, determinable, annual, periodic income) and ECI (effectively connected income).
If you treat rental income as effectively connected income, the 30% does not apply.
Foreign investors can report rental income to the IRS by completing U.S. Internal Revenue Service Form W-8ECI.
US real estate, is it easy and safe for Koreans to invest?
- Koreans can easily acquire U.S. real estate, and there is no special discrimination between foreigners and nationals in the United States.
When it comes to reporting rental properties (in the U.S.) and the taxes associated with them in the U.S., Koreans have the same tax benefits as Americans.
Also, U.S. permanent residency or citizenship is not a requirement to purchase U.S. real estate.
If you already own rental property in the U.S., what tax deductions are available to you?
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If you own a home for your primary residence, you can take tax deductions for mortgage interest, property taxes, mortgage insurance if you own less than 20% of the home, and
discount points purchased to lower the interest on your mortgage loan.If you own a home for rental purposes, you can take tax deductions for mortgage interest, property taxes, repairs, attorney fees, property management fees, homeowner association fees,
and other expenses, such as property management fees, and depreciation of the building.The most powerful of these tax deductions is the depreciation of buildings.
You can deduct the depreciation of your building over 27.5 years for residential property and 39 years for commercial property.
In Korea, there is a final step in buying real estate called 'registration', is there a registration in the US?
- The United States also has a deed of ownership, which we call a “house document.
The deed is recorded in the county office where the property is located, and the recorded title deed is received by the buyer, who is the transferee, and the
Once accepted, the property is considered fully vested.
Do I have to give my earnest money to the closing attorney or escrow company after closing and not to the landlord?
- Real estate contracts in the United States vary by type.
In the United States, there are different professionals involved in each step of the acquisition process. Closing is organized and completed by an escrow company or closing attorney. Earnest money is often deposited into an escrow account with the escrow company or closing attorney handling the closing,
Most buyers and sellers also prefer this.
However, you don’t have to do so.
If the contract specifies who the down payment is to be paid to, then they can
receive the down payment even if it’s the seller or the new home builder. The amount of the down payment and who it’s paid to should be exactly as stated in the contract.
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