There are different types of American property.you can choose from, You can go for the one you want.
There exist five main classifications of American property. They are:
Residential Property: This is a type of property that is bought by someone for individuals or households to live in it. It includes different kinds of homes and other types of living arrangements.
Commercial Property: This type of property is used for business activities. Also, it pertains to erecting that houses business. Generally, any property that is used to generate income is termed commercial property.
Industrial Property: This particular type of property exists as the property which is used for building, repair, exchange or manufacturing, or processing finished goods from raw materials.
Raw property: It is a kind of property that has not been used for any form of business. For instance, it can be raw land. Raw land in the sense that no erection of building it growing of crops have been done in that land.
Special-use Property: special-use property exists as a building erected for special formation materials. It is also any unique physical design that has limits its utility to the use for which it was built.
Since we have known the types of American property, we can now go into the main topic.
How to buy an American Property from Nigeria.
Anyone can buy a property or property from America regardless of his or her citizen.
As a Nigerian for you to be able to buy a property from America, you should do the following:
i. Get Facts on Taxes First: Buying Property as a Nigerian for the first time. You might not be sure if it’s possible to buy a property from Nigeria. Good news! Anyone can buy property in the US, regardless of their citizenship. However, you’ll need to be conscious of your US tax responsibilities.
Nigerian citizens can buy property since there is no citizenship requirement for real estate sales. Foreigners can even qualify for a mortgage if they meet certain requirements. However, foreign property owners do face a more challenging tax situation than US citizens.
Understanding tax rules before you buy property in America will help you make the most of your investment. Below is a breakdown of exactly what owners of foreign property file in the US and what they should anticipate paying taxes on when renting out a property or selling one in the US. For instance, you’ll want to know in what situations a 1040NR is necessary, and if 30% withholding needs to be taken out automatically from payments. So, read our 10 quick facts on buying property as a non-US citizen!
ii. IRS Publication 515
The first thing you need to know about buying property as a Nigerian is that IRS Publication 515 summarizes the rules for nonresident aliens (NRA). The Foreign Investment in Real Property Tax Act (FIRPTA) of 1980 was enacted by Congress to impose a tax on foreign persons when they sell or receive income from a US real property interest.
In general, income from real property located in the US that is owned by a nonresident alien is taxed at a 30% (or lower treaty) rate if it is not effectively connected with a US trade or business.
You Can select How Your Property Income Is Treated
If a non resident alien owns or holds interest in property located in the US for the production of income, then the NRA can choose to treat all income from that property as income effectively connected with a trade or business in the US. The choice will apply to all income from real estate located in the US. If the choice is made, then deductions can be claimed attributable to the real property income, so net income will be taxable.
Elections to Make
How do you select this? The choice can be made by making a Section 871(d) election.
The election makes a big difference, which is why you should consider the implications before buying property as a non-US citizen. For example, if rental property gross income is $30,000, without the election, the income tax would be $10,000 (30% of $30,000). With the election, deductions such as mortgage interest, property tax, etc. would reduce the taxable income and the tax payable would be 30% of the net amount.
Tax treaties might provide a reduced tax rate.
Gains Impact the Taxation
When a non-resident sells a property in the US, any gain is taxed as if the property had been sold by a US citizen or resident. This means the gain may qualify for lower long-term capital gains treatment, provided the property has been held for more than 12 months.
Nonresidents will be subject to a 15% non-resident withholding tax on the gross sales proceeds of the transaction—unless the nonresident has a specific exemption from the withholding. A petition for exemption would need to be filed with the IRS in advance of the sale date to get a certificate of exemption (Form 8288-B Application for Withholding Certificate for Dispositions by Foreign Persons of US Real Property Interests). A lower rate of 10% applies to dispositions under $1 million for US property that was acquired as personal property.
Depending on the state, there may be state tax withholding or tax liability.
The Non Resident Alien would be required to file a timely 1040NRA tax return to report the income from real estate and any associated withholding if the 871(d) election is made. Foreign persons are required to obtain a US Taxpayer Identification Number (TIN) to file a tax return.
As a Nigerian, don’t always see buying property
from America so difficult. You can buy it, after choosing the state in America where you want to buy it,you check online marketplaces in america from real estate agents such as realtor.com,
the list remains many but you can easily get your desired properties from them.
if you desire buying properties ,and you are in Nigeria, we can help you easily acquire one through our real estate solicitors. you need to set your budget and choice location in usa you want to buy property, from 1 bedroom apartment to 3 bedroom detached bungalow in usa, you need to set down your budget, mostly the least you can get in usa are between $276,000 for 1 bedroom apartment in California.
buying a full detached house in this city is between 1.4m usd and above.