New York City has always provided valuable and in-demand real estate among foreign buyers for a number of reasons, not the least of which its prime location as one of the world’s centers for culture, arts, and commerce. Many international buyers, however, may have certain questions regarding a number of areas, from how New York real estate works, to their numerous options. The following is a guide for anyone in this situation, who is considering purchasing real estate in New York despite being a citizen and resident of another country.
Expenses for New York Property Owners
One thing important to understand is that no matter what option for New York property ownership one selects, there will be additional expenses associated with it, besides just the purchase. Luckily, an owner can deduct many of these expenses from his or her taxable income, such as real estate taxes, carrying charges, and the interest that a co-op shareholder pays from the mortgage.
Real estate taxes, depending on the specific property, can amount to hundreds or thousands of dollars. Whether you’re an owner or an investor, you should consult with an accountant about how to decrease your taxes.
Co-op owners are charged maintenance fees each month, while condo owners are charged common charges as part of their monthly expenses. These charges can range from hundreds to thousands a month. The better amenities a building has, the higher the fee is.
Another important thing to realize is that the real estate market in the United States is extremely friendly to foreign buyers. The most popular purchases at the moment are townhouses and condos in New York City.
Manhattan condominiums offer wonderful, comfortable homes for families and individuals. The basic concept of a condo is that the buyer owns the apartment and shares the common areas with the other building residents. Over the past number of years, tons of new condos have been constructed in New York City, along with older buildings been renovated into condos, with all of the most modern conveniences. For the first 10 to 25 years, often buyers can find themselves receiving rather sizable savings, in the form of tax relief. Over ¼ of New York’s current real estate are condos.
Why Condos are So Popular
While every person has to pass the approval of the board, which is made up of residents who make all decisions about the building, such as rules, use, and repair, this process is not as complicated as in co-ops (see below), and is instead more of a formality.
Condos only impose minimal restrictions on their tenants as far as ownership or use. Sub-letting, part-time residence, and other options are allowed, unlike in co-ops.
Condos are more expensive than co-ops but are also much more flexible and can be more convenient. They are mostly elegant and beautifully designed, making them fantastic investments.
Buying and selling New York condos is a relatively simple procedure, particularly when compared to co-ops, so they can be very enticing to international buyers.
Condos and Townhouses Versus Co-ops
It is not impossible for a non-US citizen to buy a co-op unit. It is, however, a far greater struggle. Everyone has to pass the approval of the co-op board, which can be extremely difficult even for United States citizens, because the boards can be discerning and demanding. Being an international purchaser adds an additional layer of difficulty,.
In order to appeal to a co-op board, purchasers have to indicate that they will be good neighbors, easy to get along with, and able to contribute financially to the building’s upkeep. Co-op boards tend to want their shareholders to work in New York, have a nearly perfect credit rating in the United States, and to have a United States tax return, which poses the most significant problem for foreigners.
The Up Sides to Co-op Ownership
Co-ops can be the perfect residence, while not suited to investors. The buildings tend to be pre-war, often pre Protected content , which means gorgeous, long-lasting, sturdy architecture, beautiful facades and details, and luxury. People can expect opulent fireplaces, high ceilings, dazzling gardens, and more.
There are an enormous number of options, as over 3/4s of NYC real estate is composed of co-ops.
Co-ops are generally priced lower than condos, at a rate often between Protected content %. On the other hand, the price of monthly expenses, such as maintenance, mortgage (where applicable), real estate taxes, and utilities, could be higher. With that said, co-op shareholders are able to deduct some expenses, such as mortgage interest and real estate taxes, from taxable income.
The Down Sides to Co-op Ownership
The approval process can be difficult and lengthy. It is not uncommon for it to take weeks, if not months.
Someone purchasing a co-op unit is only allowed to have a specified level of financing that rarely, if ever, exceeds 80%.
Co-op usage has very specific