Buying a property in America as a British citizen is entirely legal and relatively common. The United States does not restrict foreign nationals from purchasing real estate, and British buyers are among the most active foreign purchasers of American property, particularly in states such as Florida, California, New York, and Texas. However, the purchasing process, mortgage market, and tax treatment are all quite different from what a UK buyer would be used to.

This guide explains what is involved in buying a house in the US as a British citizen, from finding a property and securing finance through to the legal process and ongoing tax obligations.

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No Citizenship or Visa Requirement to Buy

You do not need to be an American citizen, a permanent resident, or even hold a US visa to purchase property in the United States. Foreign nationals can buy real estate freehold in all 50 states without any special permission or residency status. The purchase gives you ownership of the property, but it does not give you the right to live in the United States. Immigration status and property ownership are entirely separate matters.

If you want to use the property for extended stays, you will need the appropriate visa. A tourist or visitor visa typically allows stays of up to 90 days under the Visa Waiver Program for UK citizens, or up to six months under a standard B-2 visa. Living in the property permanently would require a different visa category or immigration status, which is a separate process entirely.

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The American Buying Process

The American property buying process has some significant differences from the UK system. Understanding these before you start will help avoid surprises.

Real estate agents

In the US, the seller's agent and the buyer's agent are typically both paid from the seller's side of the transaction, from the proceeds of the sale. As a buyer, you can engage your own buyer's agent, known as a realtor, at no direct cost to yourself. Having your own representation is advisable, particularly as a foreign buyer unfamiliar with local market conditions and practices.

Making an offer

Offers in the US are submitted in writing through a formal purchase agreement rather than verbally as is common in the UK. The offer includes the proposed price, the closing date, any contingencies, and other terms. Offers are typically accompanied by earnest money, a deposit that demonstrates serious intent, usually between one and three percent of the purchase price, held in an escrow account.

Contingencies

Most purchase agreements include contingencies that allow the buyer to withdraw under specific circumstances without losing their earnest money. Common contingencies include a financing contingency, which allows withdrawal if the buyer cannot secure a mortgage, and an inspection contingency, which allows withdrawal or renegotiation if significant defects are found during a home inspection.

Title insurance

Title insurance is standard practice in the US and protects both the buyer and the lender against defects in the title to the property. Unlike the UK, where title issues are handled through the conveyancing process by a solicitor, American practice relies on title insurance as the primary protection mechanism. Both a lender's policy and an owner's policy are typically purchased at closing.

Closing

The closing is the equivalent of completion in the UK. It is typically handled by a title company or escrow company, and all parties or their representatives sign the legal documents transferring ownership. The buyer pays the agreed purchase price less any deposit, closing costs are settled, and the keys are handed over. The process is generally more straightforward than UK completion but involves more paperwork at the table.

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Getting a Mortgage as a British Buyer

Obtaining a US mortgage as a foreign national is more difficult than for an American citizen or resident, but it is possible. American lenders typically require a US credit history, and as a British buyer you will not have one. This means the range of lenders available to you is more limited.

Some specialist lenders and international banks with US operations offer foreign national mortgages, sometimes called non-resident mortgages. These typically require a larger down payment, often 25 to 40 percent rather than the 20 percent that is standard for domestic buyers, charge a higher interest rate to reflect the additional risk the lender takes, and require more documentation than a standard mortgage application. Documentation typically includes proof of income from UK sources, bank statements, and evidence of assets.

Cash purchases are simpler and more common among foreign buyers, as they avoid the complexity of the US mortgage market entirely. If you have the funds available, buying with cash is the more straightforward route.

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Tax Implications

Property ownership and any rental income from US property have tax implications in both the United States and the United Kingdom. Understanding these before you buy is important.

US property taxes

American homeowners pay annual property taxes to their local authority, typically at a rate of between 0.5 and 2.5 percent of the property's assessed value depending on the state and county. These are ongoing costs that vary significantly by location and should be factored into the total cost of ownership.

US rental income tax

If you rent out the property, the rental income is subject to US federal income tax. Foreign landlords are typically subject to a 30 percent withholding tax on gross rental income unless they elect to be treated as engaged in a US trade or business, in which case they pay tax on net income at the same rates as US taxpayers. Making the election and filing US tax returns is advisable for anyone renting out a US property, as net income treatment is almost always more favourable.

FIRPTA

The Foreign Investment in Real Property Tax Act requires that when a foreign national sells US real estate, the buyer must withhold 15 percent of the gross sale price and remit it to the IRS as a deposit against the seller's capital gains tax liability. This does not mean you pay 15 percent in tax, but 15 percent of the sale price is held pending settlement of the actual tax owed, which may be more or less depending on your gain and tax position.

UK tax obligations

As a UK tax resident, you remain liable to pay UK tax on worldwide income and gains, including rental income from and capital gains on a US property. The UK-US double taxation treaty means you should not pay tax twice on the same income, but you will need to report the income and gains to HMRC and claim credit for any US tax already paid.

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Practical Considerations

• Currency exchange. Buying in dollars means managing exchange rate risk. Large currency purchases are typically better made through a specialist foreign exchange broker than through a high street bank, which can save a meaningful amount on the conversion.
• Insurance. You will need US homeowners insurance, and if the property is in a flood zone or hurricane-prone area, additional specialist coverage may be required and can be expensive.
• Management. If the property is a holiday home or investment and you will not be there to manage it, a US property management company is typically needed. Their fees are usually 8 to 12 percent of rental income for full management.
• Estate planning. How the property is held in terms of ownership structure affects how it passes on death and the estate tax implications. Taking US estate planning advice is recommended, particularly if the property is of significant value.

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Summary

British citizens can legally buy property in the United States without restriction. The buying process is broadly comparable to the UK in its stages but differs in its mechanics, particularly around title insurance, contingencies, and the closing process. Mortgages for foreign buyers are available but require larger deposits and carry higher rates than domestic mortgages. Tax implications exist in both countries and require careful management.

Working with a US real estate attorney experienced in transactions with foreign buyers, and taking advice from an accountant familiar with both UK and US tax obligations, is the appropriate foundation for any British buyer considering purchasing property in America.