The United States has always been an extremely wealthy country, but how much wealth America possesses is changing. More people have access to significant amounts of American money than ever before in history!
A large part of this change comes from foreigners buying up big chunks of real estate in the U.S. Many believe that these foreign investors will make more profit off the land and property as investment material than what Americans would.
There are many reasons why powerful individuals and corporations want ownership of vast expanses of America’s natural resources. These resources include oil, water, gold, and timber.
While some critics say that having all of this valuable land around makes people feel insecure, there are also those who benefit directly from owning land in America or abroad.
This article will discuss the top ten countries that own the most amount of land in the United States and their potential benefits.
Why are there so many?
The United States has a lot of real estate. There’s no way around that fact. But why is this country such an important destination for global wealth?
This isn’t to say that all foreigners love living in America or want to live here, but they do like American property. And it’s not just because Americans seem to value property more than people (though clearly we do!).
It also gives them some sort of safety net in terms of owning land. A significant portion of the wealthy across the globe own at least one piece of land somewhere. It can be outside their home country, under their national identity, or in a tax haven.
Land ownership allows you to protect your assets, create long-term capital, and reduce exposure to volatile markets. It also provides access to basic resources, especially food and shelter.
And while most countries don’t allow nonresidents to freely purchase housing, if they’re able to, it usually doesn’t cost too much beyond what they already pay in taxes.
There are several theories about why foreign investors buy U.S. real estate. Some believe it’s due to its stability, whereas others think it’s a safe investment given America’s relatively high quality of life.
But whatever the reason, it definitely adds to the appeal.
Who are the biggest owners?
As of December 2016, there were 2 million housing units with no owner listed, which is an increase of almost 1% from last year’s tally. Almost half (48%) of these properties remain in California alone!
The second most common type of foreign real estate ownership is through “shell companies” that mask the true identity of the investor. There are now 3.7 million such shells outlingely owned homes in America- this represents a 4% growth since 2012. More than one third of those shell corporations exist in just two states: Delaware or Nevada.
There has been significant speculation as to whether or not many of these offshore investments are actually for legitimate business purposes, or if they are being used to launder money or conceal criminal activity. However, what we can say for sure is that at least 6% of all residential land in America is currently in the hands of individuals who likely don’t live in the country. This percentage may even be much higher when you include commercial property and undeveloped lots.
What does this mean for the U.S. real estate market?
The vast majority of residential property in the United States is owned not by American citizens, but rather by foreigners who live outside of America.
In fact, over 70% of all housing units are owned either fully or partially by non-U.S. residents. This includes both individuals and corporations that have significant real estate holdings in the U.S..
This isn’t necessarily a bad thing, but it is something we should be aware of as Americans because when people buy homes they tend to stay put which can hurt our local economies if those houses sit vacant for long periods.
It also contributes heavily to the growing wealth gap in America since most wealthy people are already part of the top 2% income bracket.
Nearly half (46%) of all millionaire households were made up of only one person back in 1989, making them what was then referred to as “high net worth individuals.”1 In other words, these millionaires lived off their savings alone!
Now, almost two thirds (63%) of all millionaire households contain at least two adults2, so these millionaires aren’t living like Ayn Rand anymore! They’re sharing wealth with others now!
1 https://www.federalreserve.gov/faqs/about_faq#WhatIsTheDefinitionOfHighNetWorthIndividual 2 http://millionairemommyonline.
Are there any rules regarding who can buy a property?
The United States has some of the most expensive real estate in the world, which is clearly not helping its reputation as the land of opportunity for those looking to start their own business or climb the ladder at their current job.
If you are from another country, it can be difficult trying to navigate the foreign investment laws. Even if you have the money, knowing the regulations can be tricky.
There are no hard and fast rules when it comes to what countries are allowed to do investing in US properties, but certain things are pretty much guaranteed to get blocked.
Certain types of investments like buying a house or renting an apartment to serve as your residence will almost always be rejected. This is because too many people with international income could potentially use that home as a place to live.
Another area to watch out for is royalties and capital gains taxes. Since owning a house is such a large chunk of assets, these can add up quickly.
What if I want to buy a property that is owned by a foreigner?
This is not very common, but it does happen! If you are interested in buying real estate outside of your country’s borders, then there is an option for you.
There are many ways to purchase international real estate. Some people choose to directly contact the seller through online listings or via a broker.
Alternatively, you can look into investing in pre-existing foreign properties through what’s called “real estate investment trusts (REITs).” A REIT will be offering shares in a company that owns a piece of business interest, typically a building or area of land.
By owning a share of this business, investors get exposure to both the revenue stream generated from the space as well as any potential capital gains when the owner sells. There may also be dividend payments dependent on how well the business is doing.
What is a “U.S. person”?
A U.S. Person is someone who lives in America, owns real estate or has significant investments here, and pays taxes here.
By that definition, more than half of all Americans are not US persons because we do not live in America, we do not own any real property here, and we pay no tax here. We are also prohibited from investing in anything related to this country!
In fact, many people with American citizenship are completely exempt from paying income taxes here due to some clever accounting strategies. This is why it is so hard for our government to get its hands on the very rich.
This article will focus only on the taxation of non-US Persons (i.e. individuals who are neither citizens nor green cards holders) owning real estate in the United States.
Are all foreign-owned properties illegal?
Almost no one actually says that all property owned by foreigners is “illegal” to own in America. It’s very common for people to argue this, though. They may say things like, “You can’t be owning land as an individual, so why should we let other countries’ governments do it?” or “It’s our country, we can deal with whoever wants to buy land here!”
These arguments are nonsense and baseless. They’re not real reasons; instead, they’re emotional appeals designed to get you to agree with their position.
Furthermore, even if some of these vague accusations were true (which they’re not), it would still not prove that owning land is inherently immoral or unethical. In fact, there are many ways for average Americans to contribute towards solving global poverty through donating, investing in, or running programs related to charity, health, education, or housing.
This article will talk about how much land is really owned by foreigners in America, what legal steps can be taken against owners who violate US laws, and what politicians and media commentators often leave out when talking about this topic.
Is it worth it to renter or to sell?
As mentioned earlier, there are several ways to determine if owning real estate is financially viable. One of the most important questions to ask yourself is whether or not you want to be a landlord. If so, then you need to consider if renting is your best option.
There are many reasons why investing in rental property can’t quite make up for the costs that own a home incurs. The initial cost to buy a house covers only half of what renters must pay in rent and mortgage payments. Also, landlords typically have additional expenses that owners don’t, such as taxes and maintenance.
Renting also may offer less financial security in the long run. Even though people often talk about how great it is having roommates, this really isn’t the case when they fail to account for changes like tax laws or income levels. A roommate agreement usually includes a clause that requires someone to stay at least part-time in the residence, which eliminates some of the potential savings.
Another reason to keep rentals as short term investments is because it is more difficult to do in Canada. It is much easier to purchase land and build a house here than in other countries where homes tend to be built higher. More expensive building materials mean longer depreciation allowances, making it possible to write off larger chunks of loss over time.