Can I Buy a House in America If I Live in the UK?

If you’ve wondered, “Can I buy a house in America if I live in the UK?” the answer is yes! Foreigners can buy property in the US, and UK residents make up four percent of all foreign homebuyers in the United States. In this guide, we’ll share the benefits of owning American real estate, steps for buying a house in the US, and tax implications to keep in mind!

Summary:

• The US has no laws preventing non-residents, including UK citizens, from buying and owning property in America.

• Non-residents can use a foreign national mortgage loan or DSCR (debt-service coverage ratio) loan to get property financing.

• UK citizens must pay property taxes, rental income taxes, and capital gains tax for owning and selling US real estate.

Reasons to Buy a Home in the US

Why would a UK citizen buy a home in the US? There are a few ways that foreigners use American real estate:

Rental Property

A rental property is a home you buy and rent out to tenants for a profit. It’s often easier to earn real estate cash flow in the US than in the UK, as there is more supply and housing is more affordable.

Browse cash-flowing rental properties in some of the best US markets!

Vacation Home

A vacation home is a property you can visit when you’re stateside. When you’re not using your US vacation home, you can rent it out and make a profit!

Primary Residence

You can buy a primary residence in the US if you plan to move to or spend a significant amount of time in the country. Just keep in mind that buying property in the US does not grant residency or citizenship to non-citizens.

Why Invest in US Real Estate?

What makes the US housing market so attractive to UK investors? Here are some of the benefits of buying US real estate:

Lower Home Prices

While home prices vary from one area to the next, there are many US markets where homes are much more affordable than in the UK. You could purchase a US property for as little as a few hundred thousand dollars in many areas!

Check out our full list of the best states to invest in real estate!

Favorable Exchange Rate

The British pound is stronger than the US dollar, which means you’ll have more money to invest in a US property. At the current exchange rate, GBP 250,000 could buy you a US property worth well over USD 300,000!

Long-Term, Fixed-Rate Mortgages

UK interest rate terms typically only last for two to five years, but in the US, 30-year fixed-rate mortgages are the norm. This allows you to lock in your monthly payment for the long haul and only refinance when it makes sense for you.

Bigger Tax Benefits

The US allows you to claim depreciation on residential properties over 27½ years. You can also exclude up to $250,000 in capital gains ($500,000 for joint filers) on your primary residence and even defer capital gains tax on investment properties through a 1031 exchange.

Need expert guidance on investing in US real estate?

How to Buy a House in the US as a UK Citizen

Are you a UK citizen or resident looking to buy a house in the US? Follow these steps to find and purchase your American home:

1. Find an Agent or Turnkey Provider 

Finding an agent or turnkey provider is a crucial first step to buying a US home, as this individual will be your eyes and ears when buying from afar. If you work with a turnkey provider, they will manage your property for you and can even have tenants placed ahead of time!

2. Get Pre-Approved

Next, determine how you’ll fund your property and, if necessary, get pre-approved for a loan. Lending requirements are similar for residents and non-residents. In most cases, you’ll need valid identification, proof of income, recent tax returns, and bank statements.

There are two ways to buy a US property as a UK citizen:

Get a Mortgage

If you’re a nonresident, you can get a foreign national mortgage loan or DSCR (debt-service coverage ratio) loan, which may require a larger investment property down payment or higher interest rate. Permanent residents can get normal, government-backed loans.

Pay Cash

Financing is one of the biggest hurdles foreign homebuyers face. If you can pay for your home in cash, you can sidestep this challenge entirely!

3. Look at Properties

Today, you don’t even have to visit a property in person before buying it. Ask your real estate agent or turnkey company to provide photos or a virtual house tour!

Check out our turnkey rental properties for sale!

4. Make Your Offer

Once you find a property you want to buy, make your offer to the seller. Be sure to include key details, such as the purchase price, earnest money deposit amount, and any contingencies.

5. Perform Inspections

Doing your due diligence is crucial when investing abroad. Make sure you’re fully comfortable with the state of the property you’re buying!

6. Hire a Property Manager

If you plan on turning your US home into a rental property, you’ll need to hire a property manager to take care of day-to-day operations. If you buy a turnkey rental, this is already arranged for you!

7. Close on the Property

You don’t need to be in the United States when you close on your new property. Just make sure your title company, escrow agent, or Power of Attorney (POA) can facilitate remote closings!

Do You Need to Pay Taxes on a US Property?

Yes, UK citizens must pay property taxes, rental income taxes, and capital gains tax on a sale (if it’s not your primary residence and you don’t use a 1031 exchange).

Real estate income will need to be reported on both US and UK tax returns. However, you’ll only pay taxes to the IRS (Internal Revenue Service), thanks to a US-UK tax treaty that prevents double taxation.

How Do You Manage a Rental Property from Afar?

Managing a rental property from afar is the biggest challenge you’ll face as a UK citizen investing in US real estate. You’ll need to find a reliable property manager to oversee routine tasks, such as finding tenants, collecting rent, coordinating maintenance and repairs, and handling evictions.

When you buy turnkey real estate, this is easy! These newly built or renovated rentals require very little maintenance, often have tenants in place, and are professionally managed for you.

Ready to Buy a Home in the US?

If you’re ready to get your hands on a piece of American real estate, follow the steps above to find and purchase your first US property!

Don’t underestimate the challenge of managing and maintaining property from afar. Buying a turnkey rental is the easiest way to invest in US real estate as a UK citizen, as these properties are often already rented and managed!

Rent to Retirement has turnkey rentals for sale nationwide!

Can I Buy a House in America If I Live in the UK FAQs

Can a British Citizen Buy a House in the US?

Yes, a British citizen can buy a house in the US! There are no laws preventing foreigners from buying American real estate, and British citizens have the same property ownership rights as US citizens.

Can I Buy a House in America If I Don’t Live There?

Yes, you can purchase US real estate without being a citizen or resident. Buy a primary residence, vacation home, or rental property!

Can a UK Citizen Get a Mortgage in the US?

Yes, a UK citizen can use a foreign national mortgage loan or DSCR loan to finance their US property. These loan products allow you to borrow money without a US credit history!