Latest figures show that four million US citizens own property abroad, a much higher proportion than, say, among British citizens. The differences between the US approach to real estate purchases and the systems to be found abroad are legion.
The 4 million statistic seems surprising in view of the fact that Americans abroad must file tax returns (and often pay tax) with the US Internal Revenue Service every year, whereas UK citizens are able to avoid this onerous chore unless the HM Revenue & Customs happens to turn its beady eye upon them.
Failure to send in tax returns in a timely manner could lead to an American paying income tax twice over (once in their country of domicile and again in the States) rather than just paying a penalty to the revenue. Americans abroad normally don’t pay income tax to the IRS on the first $82,500 of income but since last year they have started to pay higher tax rates on the excess AND incur high rates for housing benefits paid by their employers (read more on investorsoffshore.com). For more information about the tax situation for American expats visit www.usa-international-offshore-expatriate-tax.com .
The International Consortium of Real Estate Agents provides valuable details on the framework for residential and commercial property dealings in the USA and 24 other countries.
However, in some ways buying abroad for Americans can be more straightforward. Most countries have national licensing scheme for Estate Agents/Realtors as opposed to state licensing of the profession in America. However, US realtors have to pass examinations and go through continuing education for licence renewal. US house buyers in Australia would find a similar training regime and the local variations between one state and another but in the UK house-buyers and sellers would not expect this formal training, although there is a code of practice.
One big difference that Americans purchasing abroad will discover is that the tidy relationship of sellers agents and purchasers agents does not obtain in most European countries. The agent is only working on behalf of the vendor. In the US where a broker has been involved in bringing the agents and principals together they may charge from 5% to 7% of the value of the property, a lot more than the 1.5 to 2% commission that is common in England.
With certain exceptions, land and property law and property registration law is in the hands of the individual states and this can mean variations in such areas as the rights of foreigners to own property from one state to another. Federal law on subjects such as sensitive resources, bankruptcy and income tax can impact on the legal situation regarding property ownership.
For some of the broader implications of living abroad for Americans the escapeartist.com expatriate portal can give valuable insights. For instance the Americans in Greece site warns US citizens of Greek origin about the dangers of being called up for Greek military service.