Buying Real Estate in the US as a Foreigner: FIRPTA, ITIN and Financing

Buying real estate in the United States as a foreign investor is legally possible even without a visa, green card or citizenship. The American real estate market is one of the few in the developed world that imposes no federal restrictions on foreign ownership. What most buyers discover too late is that the complexity lies not in the purchase itself, but in the tax and financial framework surrounding it. A federal law called FIRPTA can withhold 15% of the gross sale price in the future, financing for non-residents requires a down payment of 20% to 40%, and since 2025 FHA loans are no longer available to non-permanent residents. Knowing these rules before signing any contract is the difference between a secure transaction and a five-figure tax surprise.

Legal rights of the foreign buyer

No US federal law prohibits foreigners from buying, recording or holding real property in the United States, regardless of immigration status. Property rights are firmly established in the American legal system, and recording is done transparently at county recorder’s offices with public access. Isolated restrictions exist in some states for large agricultural properties or those near military installations, but they do not affect residential or commercial urban properties in the areas most sought after by international buyers.

It is essential to distinguish two concepts that are often confused: the right to buy and the right to reside. A foreign non-resident can acquire an apartment in Miami without ever having entered the US or having any visa. However, to use the property as a residence, even temporarily, valid immigration status is required. The B-2 tourist visa allows stays of up to 180 days per admission, but does not authorize permanent residence, and purchasing a property does not by itself confer any additional immigration rights. Buying real estate is never equivalent to obtaining a residence visa.

ITIN: the indispensable tax identification number

The ITIN (Individual Taxpayer Identification Number) is issued by the IRS for individuals who do not have an SSN (Social Security Number). For foreigners buying property in the US, the ITIN is practically indispensable for three reasons: it is required by most mortgage lenders as part of the approval process, it is necessary to report rental income to the IRS, and it is mandatory for processing the FIRPTA withholding when the property is eventually sold. Without it, the investor is subject to automatic withholdings on all income generated by the property, with no right to deductions.

The application is submitted via Form W-7, sent to the IRS together with a certified or original copy of the passport and supporting documentation proving the need for the number. Processing time is generally 7 to 11 weeks. Some financial institutions allow the mortgage review to begin before the ITIN is issued, provided the application is already in progress with a tracking record in hand. Others require the number before any approval. Cash purchases can be completed without an ITIN, but the number will be indispensable for any future taxable event, including receipt of rental income and the eventual sale of the property.

Financing for non-residents in 2026

Mortgage financing for foreigners, known as a Foreign National Mortgage, is offered by specialized lenders through Non-QM (Non-Qualified Mortgage) programs, outside the conventional guidelines of Fannie Mae and Freddie Mac. The conditions are significantly more restrictive than those applied to citizens or permanent residents, and the 2026 landscape was affected by a relevant policy change.

For buyers living outside the US without a long-term visa, the required down payment ranges from 20% to 40% of the property value, depending on the lender and the strength of the documentation provided. Green card holders or holders of valid work visas such as H-1B, L-1 and O-1 can access conventional financing with down payments as low as 3%, under the same conditions as US citizens. The difference in treatment between these two profiles is substantial and should guide the planning of anyone still in the process of regularizing their immigration status.

A critical point for anyone planning to buy in 2026: as a result of an executive order signed by President Donald Trump in February 2025, FHA (Federal Housing Administration) programs are no longer accessible to non-permanent residents. The FHA route, historically popular for requiring only a 3.5% down payment, is no longer available to foreigners without a green card or permanent resident status. Conventional and Non-QM programs remain accessible, but with larger down payments and interest rates typically 0.5 to 1.5 percentage points above conventional market rates.

• Typical documentation: bank statements for the last 12 to 24 months, proof of income (tax returns from the country of origin, pay stubs), bank reference letters and, in many cases, proof of 12 months of reserves in a US account
• Credit score: without a US credit history, many lenders accept an international credit report or reference letters from the bank in the country of origin
• ITIN: required by most mortgage lenders specializing in Foreign National Mortgages; starting the process early speeds up approval

FIRPTA: 15% withholding on sale

The FIRPTA (Foreign Investment in Real Property Tax Act) is the federal legislation that most surprises foreign property owners in the US, not at the time of purchase, but years later at the time of sale. When a foreigner sells a US property, the buyer is legally required to withhold 15% of the gross sale price and remit it to the IRS via Form 8288 within 20 days of the transfer, regardless of the actual gain realized by the seller. The seller receives Form 1042-S or 8288-A as proof of withholding.

In practice: if a foreign investor bought a property for $350,000 and sells it for $500,000, the buyer must withhold $75,000 (15% of $500,000), even if the actual gain is only $150,000. The seller can request a Withholding Certificate from the IRS to reduce the withholding to the amount proportional to the tax actually owed, but the request must be initiated before or immediately after the sale, with its own deadlines and procedural requirements.

There are three key exemption thresholds to know before investing:

• Sale up to $300,000: if the buyer declares they will use the property as their primary residence, there is no FIRPTA withholding, regardless of the foreign seller’s immigration status
• Sale between $300,001 and $1 million: the withholding drops to 10% if the buyer declares primary residence use
• Above $1 million: full 15% withholding with no exception, regardless of how the property is used

Recurring taxes and ownership structure

Property tax is levied annually by state and local governments and varies considerably by location. In Florida, a popular destination for international buyers, the effective rate ranges from 0.8% to 1.5% of the assessed value per year. In states such as New York and New Jersey, it can exceed 2%. There is no distinction between US and foreign owners for property tax purposes. Both pay the same local rate.

If the property is rented out, the income is taxable by the IRS. Foreigners without an ITIN are subject to automatic withholding of 30% on gross income, with no deductions allowed. With an ITIN and a US income tax return (Form 1040-NR for non-residents), it is possible to elect the net income regime, deducting expenses such as mortgage interest, property depreciation, maintenance and management fees. This substantially reduces the effective tax burden and frequently eliminates tax due in the first years of ownership.

Many foreign investors choose to purchase properties through a US LLC (Limited Liability Company), separating personal assets from the property and creating a structure that can offer advantages in tax planning and asset protection. The LLC can be treated as a fiscally transparent entity (pass-through) or elect taxation as a corporation (C-Corp), with different impacts depending on the investment volume and the buyer’s objectives. This decision involves complex variables in international tax law. Buyers who acquire property through a US LLC must also comply with beneficial ownership reporting requirements with FinCEN, rules that have become more comprehensive in recent years, and whose specifics for foreign non-residents should be verified with legal and accounting advisors specializing in international transactions.

Victoria Harper

Editor-in-Chief

Meet the author

Leading journalism and editorial content at Visto n’ Visa, Victoria helps make immigration topics clear, trustworthy, and easy to understand. Her focus is on delivering useful, human, and relevant content for people exploring new paths abroad.