Legal

American law is very similar to UK law. Each party, buyer and seller, has legal representation. For the buyer, it is best to use a "Title Company". This company "searches" the title to make sure all is "clear". They also hold the monies in escrow on your behalf until closing is achieved. Closing in USA must take place within 6 weeks.

Closing Costs

Closing costs on average in USA comes is approx. 5% ; Title Company/Lawyer, mortgage arrangement fee etc.

Mortgages/Loan

Loans to 70% LTV are available with rates from approx. 7% average. Mortgages vary and depends on deposit. Normal mortgage is 7 years interest only and 23 years amort.

Taxes

There are no federal taxes on most transactions when you are a buyer. However please note the IRS requires 10% of the transaction to be held back when a foreigner sells. Refer to this website for further details. State and local taxes will vary from region to region.

50% TAX DEPRECIATION/ CASH FLOW (click here for report!!)

CASH FLOW PROJECTION

  • Based on figures as of 31 January 2008. Allow error margin of +/-5%
  • Based on 30 year mortgage : 7 years interest only + 23 years amort. at 7%
  • Appraisal will be between $30.000 & $40.000 above investment price.

HOUSE / 3 BEDROOM (**to nearest $100)

 Purchase price $135.000
Down payment 30% $40,000
Mortgage $95.000

Annual rents : $14,800.00
Mortgage expense $6,700.00
Mgmt $1,500.00
RE Taxes $1,000.00
Insurance $2,600.00
Sub-total : $11.800

Net : $3,000

DUPLEX (** to nearest $100)

Purchase price $245.000
Dep $74.000
Mortgage $171.000

Rents $27,400
Mortgage exp $12.000
Mgmt $2,700
RE taxes $1,900
Ins $3,000
Sub-total : $19.600

Net $7,800

MORTGAGE INTEREST; PROPERTY TAXES. MANAGEMENT FEE�S, TRAVEL EXPENSES TO VISIT PROPERTY(s): etc..etc� ARE ALL TAX DEDUCTABLE ITEMS PLUS/+ YOUR 50% DEPRECIATION, (WHICH CAN BE CARRIED FORWARD FOR UP TO 15 YEARS); MEANS THAT NET IS REALLY NETT!!!!

This is the first year outlook. Rents increase between 3 and 6 % annually. Results may vary

A GREAT WAY TO GROW WEALTH - THE "1031 EXCHANGE"

This system is unique to the USA and benefits overseas investors - especially those looking for great retirement "funds"!

In simple "terms" - you can sell an investment property that has made considerable capital gains; and provided that you invest in another investment property within 180 days, your capital gain is "deferred". If you keep deferring until over the age of 65; your capital gains tax is reduced to 10%. An enormous benefit to your retirement plan!!

For "in-depth" details click here.

DOUBLE TAXATION

Every country has double taxations treaties so you do not pay tax twice.

When selling your property the US government have a 'withholding' tax of 10% on overseas investors. You then have 1 year to submit your tax returns and claim refund - unless using at '1031 Exchange' or property held in LLC.

While we are more than willing to give you the benefit of our experience re. taxes - we are neither accountants, fiscalists or tax lawyers - therefore, please consult your international tax adviser for accurate details.



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