At Aptus Capital Group, we offer a wide variety of services and solutions for all kinds of businesses. Aptus Group assists individuals, progressive businesses, and community organizations, with a particular focus on the middle market.
Mortgage loan financing is available for foreign buyers, and can be obtained through a U.S. or non-U.S. bank. Due to the United States’ credit crisis, lenders have tightened credit criteria and require foreign buyers to pay forth 40% as a down payment.
Financing serves as the stepping stone to leverage funds, thereby magnifying returns. For example, if an foreign investor purchases a property for $1 million in cash, he will get the benefit of only one property. If on the other hand, he obtains mortgage financing and puts forth only 50% of the down payment, the foreign investor can purchase two properties, therefore, benefiting from the appreciation of two properties with the same theoretical equity investment.
This is arranged through a bank in the United States, requiring nearly 40% down payment (60% loan-to-value). It also requires that the buyer show liquid assets based on a multiple of the monthly payments. Financing in the U.S. would also require the buyer to pay about 2% mortgage tax.
Transaction costs consist of nearly (X)% of the loan amount. This estimation includes mansion tax, mortgage tax, title insurance, attorney fees, recording taxes and administration expenses. Like all cash closing, the transaction costs are about (X)% of the property price. The broker’s commission is paid by the seller’s proceeds. The seller, on the other hand, faces a transaction cost that is about (X)% of the selling price, which is driven by the broker’s commission and transfer taxes.
Property taxes reflect the monthly expense with each property paid quarterly. For example, if there is a mortgage, the bank could escrow the tax amount. This would mean that there would be a collection and payment on behalf of the owner. For properties that exclude a tax abatement, the tax is roughly (x)% of the price per year.
This tax refers to the annual taxes on profits under the assumption that the property is rented out. The United States government allows for the depreciation of property each year; however, a depreciation would have to be recaptured at the time of sale.
Estate tax is the largest tax that a foreign property owner is exposed to. United States law reflects that estate taxes can be as high as 50%. However, tax structures can be implemented to remove this risk. Our tax attorneys and accountants in network are qualified and skilled to assist our foreign clients in the area of estate tax.