Thinking of buying a property in the USA? Unlike Australia, the US doesn't have any laws that place restrictions on foreigners buying US property. This will be music to your ears if you're looking to buy a US home or investment property, but there are still lots of other important factors to take into account before you make any offers.
In this guide, we'll show you the housing market features, fees and tax obligations you need to consider when buying a property in the USA.
According to the Zillow Home Value Index in July 2023, the average home value in the USA is US$348,853 (approximately AUD$505,837). However, prices vary wildly depending on the state and whether you're looking to buy in a metro or rural area.
For example, the typical home value in New York (US$619,740), Los Angeles (US$676,795) and San Francisco (US$564,344) is very different to locations like Chicago (US$187,954), Philadelphia (US$263,109) and Indianapolis (US$215,936).
But if you're wondering where the cheapest place to buy property in the US is, head for West Virginia, where the Zillow Home Value Index for March 2023 reveals a typical home price of US$146,578. Arkansas, Kentucky, Louisiana, Mississippi and Oklahoma all also have typical home values of less than US$200,000.
Yes, Australians can buy property in the USA. There are no laws in place to stop foreigners buying US property, and you don't need to be a US citizen to buy a home in the USA.
It's also possible to qualify for a mortgage as a non-US citizen. So regardless of whether you're searching for a holiday home, an investment property or a home that will one day become your permanent residence, the US could be the perfect destination.
Just keep in mind that if you're not a US citizen, your tax obligations when you own property can get a little more complicated.
Want to buy a property in the USA from Australia? Here's how.
Your first job is to work out how much you can afford to spend. The buying process will be a lot simpler if you can pay the full purchase price upfront, but it's still possible to qualify for a mortgage from a US bank.
If you're already a customer with a global bank that has a presence in the US, you may want to consider applying for a mortgage with them. This may make it easier to qualify for a loan if you have little or no US credit history.
There are several property websites where you can browse US property listings online, with popular options including Zillow and realtor.com. Compare average prices in different states and cities around the USA, and if you're buying an investment property, check the average rental yields too. You'll also need to consider factors such as crime rates, nearby schools, shopping centres, dining and entertainment options, and the local climate.
This is the stage when you'll want to get in touch with a licensed real estate agent in the area where you want to buy. They'll be able to walk you through the steps you need to follow to buy a property in their state, and they can also offer advice on the best places to buy.
Now you can narrow down your options and decide on the property you want to buy. Consider whether you want to buy an apartment or a house, and make sure to stick within your budget.
While property listings websites are a great resource, a trusted realtor can also be your friend here. They can help you organise in-person viewings to thoroughly assess whether or not a property is right for you.
When you find the perfect property, it's time to make an offer.
The next step is to finalise all the legal and financial details of your purchase. This includes applying for full mortgage approval, and the lender will want to have the property appraised before approving your loan.
It's also time to organise a property inspection to make sure there are no hidden defects that could cost big bucks (and a lot of stress) to fix down the line. Don't forget to take out homeowners insurance too, as this is a requirement with many mortgage lenders.
The final step is to transfer money from Australia to the USA to complete the purchase. A simple and convenient option is to send an international wire transfer from your bank. But banks have high exchange rate markups and high fees, so the transaction could end up costing a lot more than you expect.
That's why it's a good idea to use a specialist money transfer service instead. With better exchange rates and lower fees, they can save you lots of money when you send money overseas.
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There are several important factors to consider before you buy a property in the US from Australia. These include:
There are several fees to consider when you buy a property in the USA. Aside from the purchase price or the down payment required to qualify for a mortgage, you'll also need to consider closing costs, which are commonly 2-5% of the purchase price. These costs include loan application and origination fees, property inspection and appraisal fees, title search and insurance fees, and transfer tax.
You'll also need to pay property tax each year, the rate of which varies depending on where your home is located and how much it's worth. The ongoing cost of homeowners insurance and any homeowners association (HOA) fees will also need to be included in your calculations.
Finally, the USA's Foreign Investment in Real Property Tax Act means you'll need to pay tax when you sell or receive income from a US property. Australia and the US have a tax treaty to prevent double taxation, but it's quite complicated. Get advice from an experienced tax professional to make sure you fully understand any tax obligations you have in the US as well as Australia.
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