NEW YORK, NY - International buyers continue to play a significant role in New York City's real estate market, with foreign nationals and corporations accounting for a substantial portion of Manhattan's luxury property sales. Manhattan real estate attorney Natalia A. Sishodia of Sishodia PLLC (https://sishodia.com/step-by-step-guide-for-foreigners-buying-real-estate-in-new-york-city/) explains the process, requirements, and tax considerations for foreigners purchasing real estate in New York City.

According to Manhattan real estate attorney Natalia A. Sishodia, U.S. law places no restrictions on foreign nationals purchasing property in New York City. Foreign buyers can acquire any property type, including single-family homes, condominiums, co-ops, townhouses, and multi-family buildings. "Foreign nationals and foreign corporations account for a significant portion of Manhattan's luxury real estate market," Sishodia explains. "While there are no legal restrictions on property ownership, certain property types present more challenges than others for international investors."

Manhattan real estate attorney Natalia A. Sishodia notes that co-operative apartments create unique obstacles for foreign buyers. Co-ops require board approval and typically demand U.S. tax returns, making purchases difficult or impossible for non-U.S. taxpayers. Condominiums and townhouses do not have these restrictions, making them the preferred choice for international investors. Luxury developments like 15 Hudson Yards and 70 Vestry Street in Tribeca attract foreign investors seeking modern amenities and simpler purchase processes than older co-op buildings.

Sishodia emphasizes that foreign buyers can obtain financing from U.S. banks, though requirements are stricter than for citizens. Several Manhattan banks offer loans to foreign investors with down payments of 30-40% and three years of mortgage payments in liquid assets held in U.S. bank accounts. "Cash purchases avoid New York's mortgage recording tax because that tax applies when a mortgage is recorded," notes Sishodia. In New York City, the combined mortgage recording tax under New York Tax Law § 253 can represent roughly 2% of the loan amount, making cash purchases financially attractive for many international buyers.

The attorney outlines that the purchase process involves several stages from initial research through closing. Foreign buyers should consult with a real estate attorney as their first step, as experienced counsel guides clients through every stage and protects their rights. The process includes preparation and planning, property search and offer, contract review and signing with a 10% deposit, due diligence including title searches and inspections, pre-closing walkthrough, and final closing.

"Most foreign investment closings happen via Power of Attorney and wire transfers," Sishodia adds. "International buyers do not need to physically be in New York City to complete their purchase, as many conduct final walkthroughs via video conference with their real estate agent."

Attorney Sishodia highlights that ownership structure significantly impacts tax liability for foreign investors. Personal ownership exposes buyers to withholding tax under the Foreign Investment in Real Property Tax Act (FIRPTA) of 15% of the sale price when they sell, as required by Internal Revenue Code § 1445. Foreign sellers also face New York State withholding tax under New York Tax Law § 663 at 10.9% on gains at closing. Personal ownership exposes investors to estate tax of up to 40% of market value upon death.

Entity ownership through an LLC or corporation offers better asset protection and estate planning benefits. Sishodia notes that co-ops typically do not allow entity purchases as they require personal ownership, while condos and townhouses accept entity ownership. This represents another reason foreign buyers prefer these property types.

The attorney explains that foreign buyers need an Individual Tax Identification Number (ITIN) if they lack a Social Security Number. The Internal Revenue Service assigns ITINs to non-resident aliens who need to comply with U.S. tax laws. The process typically takes several weeks, so international buyers should start early when planning a purchase.

Closing costs in Manhattan vary widely based on property type and financing method. The mansion tax applies to properties over $1 million, starting at 1% and increasing to 3.9% for properties over $25 million. Title insurance, recording fees at the New York County Clerk's Office, and various state and city government fees add to the total cost.

"Proper structuring from the beginning is essential because restructuring after purchase costs more and may not achieve the same results," Sishodia advises. Entity structures can help reduce estate tax exposure and provide asset protection, but the specific structure depends on the buyer's country of citizenship, residency status, and overall wealth. Some buyers use life insurance policies to provide liquidity for estate taxes, while others create specific types of trusts that remove property from their taxable estate.

For international investors considering New York City real estate, working with experienced legal counsel provides guidance through complex legal, financial, and tax considerations. The right structure and strategy make a significant difference in both short-term costs and long-term wealth preservation. To schedule a consultation, contact Sishodia PLLC at (833) 616-4646.

About Sishodia PLLC:

Sishodia PLLC is a Manhattan-based law firm focused on real estate transactions, foreign investment, and international estate planning. Led by attorney Natalia A. Sishodia, the firm represents international buyers, high-net-worth individuals, and global entrepreneurs throughout New York City, including Manhattan, Brooklyn, Queens, the Bronx, and Staten Island. For consultations, call (833) 616-4646.

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Email: natalia@sishodialaw.com

Website: https://sishodia.com/

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Company Name: Sishodia PLLC
Contact Person: Natalia A. Sishodia
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Phone: (833) 616-4646
Address:600 3rd Ave 2nd floor
City: New York
State: New York 10016
Country: United States
Website: https://sishodia.com/