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Buying a property in the USA

Your guide to the laws, fees and key steps to follow when you want to buy a property in the USA from Australia.

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.

What's the property market like 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.

Can Australians/foreigners buy property in the US?

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.

5 steps to buying a property in the US from Australia

Want to buy a property in the USA from Australia? Here's how.

1. Set your budget

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.

2. Choose a location

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.

3. Pick a property

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.

4. Get the paperwork sorted

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.

5. Transfer money

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.

Things to consider when buying a property in the US

There are several important factors to consider before you buy a property in the US from Australia. These include:

  • Cost of housing. Zillow's Home Value Index reveals that the typical home value in the USA is US$348,000, or a little over AUD$500,000 at July 2023 exchange rates. But prices vary widely depending on where you want to buy, so it's important to research median prices in the areas you're focused on.
  • Cost of living. As the US is such a large and diverse country, the cost of living varies quite a bit from one location to another. For example, just like Sydney, cities like New York, Los Angeles and San Francisco regularly feature on lists of the world's most expensive places to live. However, according to livingcost.org, the average cost of living in Australia is 5% cheaper than in the US. Make sure you research living costs in areas where you're thinking of buying before you decide on the right property.
  • Healthcare. The US healthcare system is quite different to Australia's universal healthcare system. The US system is complicated and features a mix of government coverage and private health insurance plans. Medical care is expensive, so it's important to make sure you have comprehensive cover in place.
  • Getting local advice. Buying property overseas is always going to be more complicated than buying property in Australia, so it's vital to get help from local experts. An experienced real estate agent can help you find the right property and navigate local laws, while a mortgage broker can walk you through the process of getting a US mortgage as a foreign national.
  • Money transfer options. When you're sending money overseas to make a large purchase like buying a house, the AUD/USD exchange rate you get will make a big difference to the cost of the transaction. Banks have higher exchange rate markups than specialist money transfer companies, so make sure you compare international money transfer services to find the best deal.

Taxes and fees for buying and owning property in the US

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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Tim Falk is a writer for Finder, writing across a diverse range of topics. Over the course of his 15-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors. See full bio

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