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International Real Estate Sales

Dream Town's International Real Estate Agents provide overseas real estate investors and home buyers with services and benefits that ensure a smooth and successful property purchase in Chicago.

Chicago's International Property Brokerage

Chicago's stable housing market and sizeable inventory has made it one of the leading locations for overseas home buyers. Unlike other U.S. cities, Chicago is experiencing steady real estate values and continues to establish precedent-setting residential buildings (such as the Chicago Spire and Trump Tower), which have drawn international interest in recent months.

"As a result of the declining U.S. dollar, American cities are becoming major contenders for foreign real estate investment."

Chicago's stable housing market and sizeable inventory has made it one of the leading locations for overseas home buyers. Unlike other U.S. cities, Chicago is experiencing steady real estate values and continues to establish precedent-setting residential buildings (such as the Chicago Spire and Trump Tower), which have drawn international interest in recent months.

Buying real estate in another country can involve complex legal formalities that can make it difficult to acquire property. We're here to take care of the added requirements, to represent your interests in the transaction and to provide you with the proper guidance through the entire process.

Dream Town Worldwide is an all-in-one service for foreign real estate purchasers. We handle every detail on this end, eliminating the need for you to travel back and forth. Your Dream Town International Mortgage Fees and Home Owners InsuranceMortgage Fees and Home Owners Insurance, 100% of the time. Whether you are interested in investment opportunities or personal residences, your experience with Dream Town will be professional, unproblematic and prompt.

Are You Considering Investing In U.S. Real Estate?

Please review the following for general information to keep in mind when considering investing in U.S. real estate:

Mortgage Fees and Home Owners Insurance

Mortgage fees will vary slightly among lenders, who will supply their schedule of fees to you upon application. Foreign real estate investors will need to open a checking account in the U.S. to facilitate monthly mortgage payments and to pay for certain pre-paid items. This should also facilitate the receipt of the investor's monthly rent checks.

It is also recommended you acquire a "Home Owners" comprehensive insurance policy for the protection of the interior elements of the unit as well as offering third-party liability coverage. Dream Town will offer you some referrals of available insurance carriers.

Legal Process

The conveyance process in the U.S. is done by a "title insurance company" that examines public records to ensure the seller is properly registered as the owner of the property. The title insurance company also insures the property against third-party title claims.

Taxation

In addition to obtaining a Tax Identification Number, overseas property investors will need to consider the following primary U.S. taxes:

  • Federal Income Taxes
  • Capital Gains Tax (please refer to the section on The 1031 Exchange Option) - A capital gains tax is a tax upon the profits upon the sale of your property
  • Withholding Tax (a portion of the rental income is withheld against future tax obligations)
  • Estate (Inheritance) Tax

Foreign real estate investors are advised to consult with their tax, accounting, financial, and legal advisors as necessary. For your convenience, we have attached a list of U.S. sources you may contact for assistance in these matters.

The 1031 Exchange Exit Option

Foreign real estate investors who buy in the U.S. are subject to U.S. capital gains tax liability at both the federal and state levels on the sale of appreciated properties. Experienced real estate investors recognize the 1031 exchange as an effective and simple means toward deferring tax liabilities incurred upon the future sale of U.S. real property. Section 1031 of the Internal Revenue Code allows 100% of the gains from the disposition of business or investment property to be deferred into new "like kind" replacement property. These deferred gains, as well as the gains from the new property, are not taxed as long as 1031 Exchange rules are followed.

The overall U.S. capital gains tax rate averages between 20% and 25% for the individual investor (depending on the amount of depreciation taken and the applicable state income tax rate) and by exchanging into a new U.S. property at the end of a holding period, U.S. property owners can legally defer payment of these taxes and free-up capital for new investments by following 1031 rules. Real Estate investors can therefore increase their overall returns by using 1031 exchanges to roll from one real estate investment to the next.

Dream Town Realty will refer only the most well-established and secure Qualified Intermediaries in the industry to facilitate your 1031 Exchange transaction. This unique investment tool gives the investor the ability to diversify, leverage and defer taxes. Your Dream Town International Real Estate Agent can help you locate an appropriate replacement property in which to reinvest requiring minimal effort on your part.

U.S. Income Tax Considerations

Non U.S. Investors in the U.S. Real Estate:

As non U.S. citizens and residents consider the purchase of United States (U.S.) real property as an investment generating capital gains and rental income, they will have concerns about the U.S. income tax system and their requirements under U.S. tax law. The information presented here will help to identify those concerns. It will focus on the specific details of an individual (or a husband and wife) non U.S. citizen and resident of purchasing rental property in the U.S. The issues presented here may not be relevant if your circumstances are different or if they change over time.

Nonresident aliens of the U.S. are only taxed on U.S. source income. U.S. source income includes net rental income from operations of U.S. real property and any taxable gain from the sale of U.S. real property.

Net rental income from operations is calculated by netting gross rents collected with related rental expenses, such as property taxes imposed by the local jurisdiction, mortgage interest, condominium maintenance fees, management fees, and depreciation expense. U.S. tax law permits the cost of residential real property to be depreciated over a period of 27.5 years. This net rental income is taxed at rates that presently range from 10 to 35 percent. For example, a rate of 10 percent would apply to the first $7,000 of net rental income. Net rental income in excess of $7,000, but less than $30,000 would be taxed at 15 percent. Thus, for a net rental income of $30,000, the U.S. income tax cost would be about $4,000. Married couples owning the property jointly will be required to file separate tax returns and each will report one half of the net rental income.

Gain from the sale of U.S. real property owned for at least one year is taxed at special capital gain rates that average about 15% regardless of the amount of the gain. Gain is calculated by netting the gross proceeds of the sale with any associated selling costs and reduced by the adjusted cost (original cost minus accumulated depreciation expense to the date of sale) of the property.

A special provision of U.S. tax law permits an owner to defer tax on the capital gain by exchanging the property for another property. In order to qualify for this deferral the "replacement" property must have a value higher than the value of the "relinquished" property. There are additional technical requirements. This investment methodology is known as the 1031 Exchange.

While the previous discussion relates to tax obligations imposed by the U.S. federal government, foreign investors should be aware that most of the 50 states impose their own local tax obligations.

Residents of several countries can benefit from United States income tax treaties arranged with their own country's taxing authority. That treaty may provide relief from double taxation by permitting a non U.S. resident to claim a credit against their home country's income tax for any income tax paid to the United States. This claim of credit is subject to the specific provisions of the tax law of their home country.

What Our Clients Say

As Chicago's most reputable international property brokerage, our clients love what we do for them.

"Our home buying experience began while we were living abroad. Even with the distance, our agent was always available to answer questions and provide us with updated information. We are so happy and really appreciate the expertise and ease which our agent brought to our first home buying experience!"

Jason and Carla Boe
London, U.K.

"My wife and I would like to thank you for the great job you have done during this year to help us buy our dream home in Naperville, Illinois. We are confident that other people would appreciate your services."

Arturo & Patricia Vaccari
Italy

"We would like to thank you for all the time and energy you put into helping us find and complete on our lovely home. Your attention to detail and hospitality have been second to none!! You really understand the emotional issues when buying a home as well as the practical ones."

Ginger and Simon Wheeler
The "London" Clients, Naperville

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