Tax Considerations for the International Buyer

A non-U.S. citizen (foreign national) may buy real estate in the U.S. without restriction.

The international buyer of real estate will need to acquire a tax identification number from the Internal Revenue Service if you receive U.S. source income.

The IRS issues Social Security Numbers to foreign nationals who reside in the U.S. and Individual Tax Identification Numbers (“ITIN”) to individuals who are not eligible for a resident Social Security Number.

ITINs are issued regardless of immigration status. With regard to real estate, a tax return must be filed by a foreign national:

  - If the property generates rental income.
  - When a property is sold by a nonresident.

The application form for an ITIN (W-7) is available at www.irs.gov/pub/irs-pdf/fw7.pdf.

Tax Withholding Requirements

In order to avoid a foreign national from failing to pay taxes on profits from the sale of U.S. real estate, 10% of the sales price is required to be withheld and sent to the Internal Revenue Service by the buyer at the time of sale.

To obtain a refund of any amount paid to the IRS, the international seller must either file a tax return or obtain a waiver in advance of the sale.

Disclaimer: The Massachusetts state bar does not certify any lawyer as a specialist or expert in real estate. As used in this website, where any reference to real estate lawyer or attorney means that the law firm has a heavy emphasis in real estate law and transactions in its practice.