Can a foreign national buy real estate in the United States?

Yes. There is no general federal restriction on foreign ownership of US real estate. Any foreign person can buy, own, lease, and sell property. Recent state laws (Florida, Texas, Arkansas, Louisiana, Tennessee) target specific countries — typically China, Russia, Iran, North Korea, Cuba, Venezuela (Maduro regime), and Syria — and do not affect Mexican, most Latin American, or European buyers.

What is FIRPTA and how does it affect me?

FIRPTA (Foreign Investment in Real Property Tax Act, IRC §897 and §1445) requires the buyer to withhold 15% of the gross sale price when the seller is a foreign person, as a prepayment toward US capital-gain tax. Exceptions: full exemption when price is ≤ $300,000 and the buyer will use it as personal residence; reduced 10% rate between $300k and $1M; and a Withholding Certificate (Form 8288-B) when actual gain is less than the automatic withholding.

What is the US estate tax exposure for a foreign owner?

A non-resident foreign person has only a $60,000 exemption on US-situs assets under IRC §2102(b). Above that, the marginal estate tax rate climbs to 40%. Compared with the $15M exemption for US persons in 2026 (made permanent by OBBBA), the gap is enormous. The classic mitigation is the foreign-corporation "blocker" structure: Foreign Person → Foreign Corporation → US LLC → Property. Shares of the foreign corporation are not US-situs and are not included in the US estate tax base.

Do I need an ITIN to buy?

You don’t need an ITIN to take title. You do need it to file an income tax return (Form 1040-NR), to make the §871(d) net election that taxes rental income at graduated rates, to allow the title company to remit FIRPTA withholding, and to file Form 5472 for your LLC. The process is Form W-7 with original or certified ID — an IRS Certified Acceptance Agent (CAA) can certify copies so you don’t mail the original passport to the IRS.

Can I finance without US credit?

Yes — through the Foreign National DSCR program. Typical requirements: 25–30% down, valid passport, two bank reference letters from your home country, two months of bank statements (translated if needed), evidence of source of funds, and the property must qualify by DSCR. No US credit, W-2, or US tax returns are required.

What annual filings does a foreign-owned LLC have?

A US single-member LLC owned by a foreign person must file Form 5472 with a pro forma Form 1120 every tax year, reporting all reportable transactions with the related party. This requirement was added in 2017 (final regs under Treas. Reg. §1.6038A-1) and the penalty for each missed year is $25,000. It is one of the most expensive — and most commonly missed — filings in the foreign-owner LLC playbook.

What about the LLC bank account?

It is typically the slowest step. Banks known to support foreign-owned LLCs include HSBC US, BMO Harris, and Bank of America Premier International, though policies change. Documentation: LLC EIN, signed operating agreement, beneficial-owner ID, and sometimes in-person branch presence. Plan 4–10 weeks to open.

Educational guide · Foreign investors

Foreign Nationals Investing in US Real Estate: Complete Guide

The United States is one of the few developed countries that allows foreign persons to own residential real estate with substantially the same legal protections as a citizen. This guide covers the full legal framework, recent state laws that have created confusion, the federal tax regime (FIRPTA, estate tax, rental withholding), the standard mitigation structures (foreign-corp "blocker"), and the practical financing path.

Educational information only. Icon Mortgage is not yet licensed in California. No loan products are being offered.

1. Legal framework: can a foreign person own US property?

At the federal level: yes, with no general restriction. No federal law prohibits foreign persons (non-citizens, non-residents) from buying, owning, leasing, or selling residential or commercial real estate in the United States. Property protection applies with the same constitutional weight to a foreign owner as to a citizen. County records, title insurance, and state courts function identically.

Federal reporting that does apply: the foreign investor incurs reporting obligations once a US LLC or US accounts are involved (covered below). The purchase itself does not require federal approval.

2. Recent state restrictions (2023–2025)

Since 2023, several states have enacted laws that limit ownership of real estate by persons or entities tied to "countries of concern." These statutes target a specific list of countries; they do not apply to Mexican, Central or South American (excluding Venezuelan-regime), or European buyers in general.

State / Statute	Effective	Countries covered	Scope
Florida SB 264	Jul 1, 2023	China, Russia, Iran, North Korea, Cuba, Venezuela (Maduro regime), Syria	Restricts acquisition of agricultural land and property within 10 miles of military installations or critical infrastructure. Upheld by the 11th Circuit in 2024.
Texas SB 17 (2025)	Sep 1, 2025	China, Russia, Iran, North Korea (governor-designated list)	Bans direct or indirect acquisition of real property, including leases of one year or more. The 2023 SB 147 did not pass; SB 17 is the version that became law.
Arkansas, Louisiana, Tennessee	2023–2024	Similar designated lists (PRC, Russia, Iran, NK, Cuba, Venezuela, Syria)	Variable scope — agricultural land and/or land near military installations.

Practical takeaway: if you are Mexican, Canadian, European, or from any country not on the designated list, these laws do not apply to you. The legislative wave is targeted specifically at the People's Republic of China and a small set of adversarial states — it is not a generic anti-foreign restriction.

3. FIRPTA: the 15% withholding

The Foreign Investment in Real Property Tax Act (IRC §897 governs taxation, IRC §1445 governs withholding) ensures the IRS collects capital-gain tax when a foreign person sells US real property. Mechanism: the buyer withholds 15% of the gross sale price and remits it to the IRS within 20 days of closing using Form 8288 and Form 8288-A.

Standard rate: 15% of gross sale price when seller is foreign and price exceeds $1,000,000.
Reduced 10% rate: price between $300,001 and $1,000,000 if buyer will use it as personal residence.
Full exemption: price ≤ $300,000 if buyer signs an affidavit of personal-residence use for at least 50% of the next 24 months.
Withholding Certificate (Form 8288-B): the foreign seller can apply to the IRS to reduce or eliminate the withholding when actual gain (price minus basis) is less than the automatic withholding. Typically takes 90 days.

Important: FIRPTA withholding is only withholding, not a final tax. The foreign seller files Form 1040-NR (individual) or 1120-F (foreign corporation) at year end and reconciles. If the withholding exceeds actual tax, the IRS refunds.

4. Rental income tax: §1441 default vs. §871(d) / §882(d) net election

Default (§1441 / §1442): 30% withholding on gross rent paid to the foreign owner. No deductions allowed — the foreign owner pays 30% of gross rent without subtracting property tax, mortgage interest, depreciation, maintenance, or management fees. It is destructive and almost no one chooses to operate this way.

Net election (IRC §871(d) for individuals, §882(d) for corporations): the foreign taxpayer elects to treat rental income as effectively connected with a US trade or business. Result: taxed on net income at graduated rates (10–37%), after deductions for mortgage interest, property tax, depreciation (27.5 years residential), maintenance, insurance, reasonable travel related to the rental, and professional fees. Almost always favorable.

The election is made by attaching a statement to Form 1040-NR or 1120-F in the first applicable year. Once made, it is binding for all future years unless revoked with IRS consent. This requires an ITIN.

5. US estate tax: the largest hidden risk

This is where foreign investors most commonly fail to plan. The rules are extremely asymmetric:

Status	2026 estate-tax exemption	Code section
US citizen or US tax resident	$15,000,000 per person (OBBBA, permanent)	IRC §2010
Non-resident foreign person	$60,000 on US-situs assets only	IRC §2102(b)

If a foreign person dies owning a Miami home directly, valued at $1,000,000, the estate owes US estate tax on the $940,000 above the $60,000 exemption, at marginal rates up to 40%. The bill can approach $300,000 — and the IRS can lien the property until paid (statutory lien arises automatically).

Treaties: the US has estate tax treaties with a handful of countries (UK, France, Germany, Netherlands, Australia, etc.) that may expand the exemption. Mexico does not have an estate-tax treaty with the US. Structural planning is therefore essential for Mexican investors.

6. The "blocker" structure: how to mitigate estate exposure

The classic mitigation is a foreign-corporation "blocker." The reasoning:

Shares of a foreign corporation (organized outside the US) are not US-situs assets for US estate-tax purposes.
If the foreign person owns shares of the foreign corporation, and the foreign corporation owns the US LLC, and the US LLC owns the property — the US-situs asset (the property) sits inside the US LLC, but what passes to heirs at death are the shares of the foreign corporation, which are not US-situs.
Result: no US estate tax at death.

Typical structure: Foreign Individual → Foreign Corporation (BVI, Cayman, Belize, Panama, or other suitable jurisdiction) → US LLC (Wyoming / Delaware / property state) → Property.

Costs: formation and annual maintenance of the foreign corporation ($1,500–5,000/year), formation and maintenance of the US LLC ($500–1,500/year), more complex compliance, and exposure to US corporate income tax (21%) plus a possible branch profits tax on top. The structure makes economic sense once property value materially exceeds $60,000 — for a $200,000+ property it is effectively required.

Alternatives: term life insurance on the foreign person with the property/heirs as beneficiary, ownership through an irrevocable foreign trust, or simply accepting the risk if value is modest. Optimal choice depends on facts — consult a CPA and an inbound-focused international tax attorney.

7. ITIN: the taxpayer identification number

The Individual Taxpayer Identification Number (ITIN) is what stands in for a Social Security Number for foreign persons with US tax obligations. For the foreign investor, ITIN is needed to:

File Form 1040-NR (non-resident return) or 1120-F (foreign corporation).
Make the §871(d) net election and tax rental income on net.
Allow the title company to remit FIRPTA withholding to the IRS at sale.
File Form 5472 / pro forma 1120 for the US LLC.

Process: Form W-7 with original or certified ID (typically passport). The form is generally filed with a tax return, with limited exceptions. To avoid mailing the original passport, applicants use an IRS Certified Acceptance Agent (CAA) who certifies the copy. Current typical issuance: 7–11 weeks.

8. Form 5472 + pro forma 1120: the filing almost everyone misses

Since 2017 (final regs under Treas. Reg. §1.6038A-1), a US single-member LLC owned by a foreign person (individual or entity) must file:

Form 5472: reports reportable transactions with the related party — capital contributions, distributions, loans, service payments, etc.
Pro forma Form 1120: a shell corporate return that carries the 5472. The LLC is not taxed as a corporation; the 1120 here is purely an administrative wrapper.

Penalty for non-filing: $25,000 per LLC per year. One of the harshest information-return penalties in the code, and one of the least-known — many investors with a single-property LLC have never heard of Form 5472. If you have a foreign-owned LLC, file every year, even when the LLC had no reportable activity.

9. FBAR and Form 8938 (limited scope)

FBAR (FinCEN Form 114) reports foreign accounts held by US persons. As a non-resident foreign owner, you generally do not file FBAR on your home-country accounts. However, if your US LLC holds a non-US account (uncommon), or if you become a US person at some later point (greencard, substantial-presence test), the rules change. Form 8938 (FATCA) operates similarly, attached to a 1040.

10. Bank account for the US LLC

Often the slowest step in the entire process. Banks known historically to serve foreign-owned LLCs (subject to change):

HSBC US — explicit international program, often requires an HSBC home-country account.
BMO Harris — Mexican and Canadian client-friendly, frequently handled at Texas branches.
Bank of America Premier International — international HNW program; meaningful minimum deposit.
Mercury and similar fintechs — faster but with shifting policies on foreign-owned LLCs; verify at time of application.

Typical documentation: LLC EIN, signed operating agreement, beneficial owner government ID, international proof of address, and sometimes physical branch presence. Plan 4–10 weeks; some banks close applications without explanation and force you to start over elsewhere.

11. Financing: Foreign National DSCR

When the foreign investor wants to finance rather than buy in cash, the standard product is Foreign National DSCR. The property qualifies via DSCR (see our complete DSCR guide) and the foreign borrower provides:

Valid passport.
25–30% down payment.
Two bank reference letters from your home-country bank.
Two months of bank statements (translated to English where applicable).
Source-of-funds documentation for the closing wire.
EIN and operating agreement of the US LLC, if closing in LLC.
Personal guaranty from the foreign member.

Not required: US credit, W-2, US tax returns, or US legal residency. Pricing is typically 0.5–1.5 points above the equivalent domestic DSCR. See the Foreign National program page for details.

12. The typical 8-step path

Strategy and structure. Decide whether to buy directly, through a US LLC, or through a foreign corporation + US LLC (blocker). Consult a CPA or an international inbound tax attorney before writing an offer.
Form the US LLC. Wyoming, Delaware, or property state. Operating agreement, registered agent, EIN from the IRS (Form SS-4 — online does not work for foreign owners; submit by fax or mail). Investors commonly use regagentca.com for California or Wyoming.
Form the foreign corporation (if blocker applies). Jurisdiction follows tax planning — frequently BVI, Cayman, Belize, or Panama.
Apply for the ITIN. Form W-7 via Certified Acceptance Agent. 7–11 weeks.
Open the US LLC bank account. Slowest step. Start early.
Financing prequalification if applicable. Foreign National DSCR.
Purchase: offer, due diligence, appraisal, title, closing. Close remotely via apostilled power of attorney at a US consulate, or fly in for in-person closing. The title company handles transfer and FIRPTA where applicable.
Annual compliance. Form 1040-NR or 1120-F for income, Form 5472 + pro forma 1120 for the LLC, state LLC report, county filings.

13. Common mistakes

Buying personally without thinking about estate tax.

A $500,000 property held in a foreign person's individual name generates $176,000+ of US estate tax with no structure. Structuring up front costs a fraction.

Not filing Form 5472.

$25,000 per year per LLC. It compounds. Five missed years across two LLCs is $250,000 in penalties.

Ignoring the §871(d) election and letting the tenant withhold 30% gross.

Without the election, you pay 30% on gross rent with no deductions — effective tax of 50–80% on economic net rent.

Assuming Florida or Texas anti-foreign laws apply to you.

If your nationality is not on the designated list (China, Russia, Iran, North Korea, Cuba, Venezuela's Maduro regime, Syria), the laws don't touch you. Read the statute, not the headline.

Skipping the ITIN and then being unable to recover FIRPTA at sale.

Without an ITIN you cannot file 1040-NR to reconcile withholding. Your cash sits with the IRS until you obtain the ITIN — months of extra delay.

Underestimating bank timelines.

Starting the LLC bank account after the offer is accepted is the #1 cause of delayed or busted closings.

Misreading the personal guaranty in Foreign National DSCR.

Foreign borrowers sign personal guaranties just like domestic borrowers. The LLC and the foreign corporation do not protect you from the lender on default — they protect you from US estate tax.

14. Related resources on this site

This page is informational. It is a general overview of the legal and tax framework that applies to foreign persons investing in US real estate as of 2026; it is not a substitute for individualized advice. State laws on foreign ownership are evolving rapidly — verify the current statute in any state where you plan to buy. Specific tax positions (the §871(d) election, blocker structure, residency analysis, treaty positions) must be confirmed with a CPA and/or inbound-focused international tax attorney. Icon Mortgage is not a licensed lender at this time, does not quote rates, and does not provide legal or tax advice. Nothing on this page constitutes legal advice, tax advice, a rate quote, or a loan offer.