New and Preconstruction Real Estate in Chicago

FOREIGN INVESTORS

Buyers from other countries who wish to purchase property in the United States should first establish a registration number with the State
Department. In this country, investors can get mortgages; you don't have to be a citizen or have a green card. Usually, though, if someone is
not a citizen, he or she must pay an investor rate for the mortgage rather than the standard rate, and that can cause confusion sometimes.
There is difference, however, when you sell the home. If you are an investor from overseas, 10 percent of the proceeds will be held back at
the settlement to cover taxes. Obtaining financing from a U.S. bank can be more complex for buyers from other countries. Pre-qualifying for a
loan usually requires a 20 percent down payment for people from other countries, although there are special programs for people with
diplomatic status so they can obtain financing with just 5 percent down. To qualify for a loan with just 10 percent down, foreign nationals
need a passport, employment verification, proof of immigration status, three credit references from the country of origin -- preferably a
mortgage or rental history for one reference -- and a U.S. bank account with enough money to cover the down payment, closing costs, and
two to four months of principal, interest, taxes and insurance. The money must have been in the bank for at least 60days. I encourage
property owners here in the U.S. who think their home might be of interest to international buyers to contact me about the possibilities of
marketing the property internationally. Many foreign buyers want what Hilton Head Island has to offer, resort-area homes near beaches or
golf courses and country estates.

Please contact me to get you in touch with lenders that are familiar with the entire process. I can also get you a list of attorney's and
accountants that specialize in dealing with purchasing property with people from other countries.

THINGS TO THINK ABOUT

Individuals are U.S. residents if they have a “green card”, which admits an individual in the U.S. as a permanent resident during the calendar
year, or “substantial presence” in the country. This is established when an individual either physically resides in the U.S. for 183 days or
more during the year or meets the formula for residency over a 3 year period.
10 % of the contract price of a sale made by a NONRESIDENT foreign owner must be withheld for tax purposes under the provisions of the
Foreign Investment in Real Property Tax Act. This amount must be paid to the IRS within 20 days of the sale. A seller may obtain a qualifying
statement from the IRS that reduces or eliminates this withholding requirement. Properties for under $300,000 that will be used by the
purchaser as a residence for a specified time period are also exempt. Sellers who’ve furnished a “nonforeign affidavit” certifying that they will
pay the tax are likewise exempt from withholding.
If you do not qualify for a Social Security number, foreign buyers and sellers must have international tax identification numbers…..these
numbers are issued by the federal government (www.federaltaxid.us) and appear on all tax returns filed by non resident aliens and on forms
that show withholding from real estate proceeds.
If you collect rents or other income for rental properties owned by foreigners who are not engaged in U.S. business or trade, you must
withhold 30% of the gross income (before expense deductions) for tax purposes before paying revenues out to the foreign owners. The
withholding amount can be less if the country where the owner resides has an income tax treaty with the United States.
This information is believed to be correct, but must be verified. Please let me know if you would like a list of legal, tax, and other professional
experts in foreign investments.

The following information is taken from a National Association of Realtors® article.

Based on the statistics from the US Department of Commerce, the amount of foreign investment in the US real estate business was over
$44 billion in 1998 and is expected to continue to rise. The political and economic stability, an inventory of investment-grade properties on
the market, an environment that does not discriminate against foreign investment, attractive risk-return ratio, and tax incentives are the main
factors that attract foreign investors.

Foreign investors have typically invested in major metropolitan areas, such as New York, Boston, San Francisco, and Washington, D.C.
However, they are beginning to expand into other areas, including suburbs, where they have experience and familiarity with the market. They
are purchasing in resort areas in warm clients such as Hilton Head Island, South Carolina.

Generally, the central (federal) government's involvement in U.S. land law is very limited, mainly in the sensitive resources, industries,
federal and state owned real properties, and land comprising territories. Federal laws in bankruptcy, environmental, securities, and income
tax also have impact to real property transactions. In essence, American land law is state law. Each state has its own statute and/or
regulation that govern foreign real estate or land ownership. State laws are divided into certain roughly identifiable categories in terms of
governing foreign ownership. Approximately eighteen states have legislation or adopted constitutional amendments to remove common law
disabilities on alien ownership of land. For example, the statutes in Nevada expressly allow nonresident aliens to hold, take and enjoy real
property on the same terms as resident aliens, and also allow nonresident corporations to do so on the same terms as domestic
corporations. In another seven or eight states, there is no express restriction on foreign ownership and therefore by implication none exists.

Some states may have limitations on alien ownership in terms of acreage or size. In Wisconsin, the limit is set to 640 acres for a
nonresident alien unless it is acquired by devise or inheritance or as a collection of a debt. Others may have restrictions on the length of
ownership, e.g., a maximum of five years' ownership in Nebraska is allowed. For more information, please refer to "Foreign Investment in
U.S. Real Estate, A Comprehensive Guide," Section of Real Property, Probate and Trust Law, American Bar Association, Timothy E. Powers,
or contact legal counsel.

Ownership of American real property passes under state laws by voluntary delivery of transfer documents, as in the case of sale, or by
operation of law, as in the case of inheritance. The various state land registration systems may cause some confusion as the sponsoring
governmental body which maintains the office in which documents are recorded simply provides an archive where an interested person may
determine the quality of title to a particular parcel of real property. Constructive notice of ownership can be given to the world at large by
recording an instrument of ownership transfer, such as a deed. Recording a valid and duly delivered deed, lease, mortgage or other
instrument of transfer prevents a third party from falsely claiming to be a legitimate purchaser from the owner. However, the recording may
not help whereas document is void due to forgery or failure of delivery. The Statute of Frauds, a version of which is in effect in every state,
requires that there is written evidence of the essential elements of transactions effecting land transfers in order to validate them.

Due to the complexity of foreign ownership in the U.S., it is advisable to seek help from a legal professional before deciding to invest in the
U.S. real estate.

The following professionals, in addition to real estate agents, may be involved in a real estate transaction. Please note that a buyer or seller
may not necessarily choose to employ all of the professionals listed below in a real estate transaction.
Lenders (banks, mortgage loan institutes) - A lender provides funds necessary to complete a transaction and may provide other assistance
to a home buyer with finance related issues;
Attorney - An attorney may be involved in contract preparation, related document inspection, closing document reviewing, closing/settlement,
etc.;
Appraisers - An appraiser is usually involved in evaluating the value of a property;
Inspectors - An inspector examines the property in an effort to identify hidden defects or problems that the buyer may not have noted or is
incapable of identifying;
Notaries - Notaries notarize documents, that is, they witness and affirm the authenticity of signatures on the documents. Sometimes, this
service is provided free as a courtesy by a client's banking institution, or by the transaction closing agent;
Title companies - Title companies provide title insurance to a real property, and may also provide closing or escrow services. Title fee varies
from company to company;
Accountants - Accountants help buyers or seller recognize and solve tax and finance related issues;
Surveyors - A surveyor measures land and charts its boundaries, improvements, and relationship to the property surrounding it. A survey is
often required by the lender to determine the exact property boundaries of the property and assure that the correct legal description of the
property is given in the deed.
In some states, lawyers may be allowed to provide real estate services. Although lawyers, notaries or other professionals may not
necessarily be required in real estate transactions, it is in a client's best interest to get expert help from those professionals since real
estate investment probably is the largest financial investment in a person's lifetime.