Buying Property Abroad as an American: Ownership Rules, Financing and Reporting

Buying a home or an investment property abroad starts with three questions. Can a foreigner own this property, and in what form? How will you pay for it? And what will the IRS want to know, now and when you sell? The answers come from two legal systems at once: the country where the property sits and the United States, which keeps taxing you as a citizen wherever your assets are.

This is general information. Your CPA and counsel confirm the details for your case.

Ownership rules differ by country

Foreign ownership is possible in many places, usually with conditions. In Dubai, ownership of real property is reserved to UAE and GCC nationals and certain companies, but non-UAE nationals may be granted freehold ownership without time limits, or a lease or usufruct of up to 99 years, in areas the Ruler designates. ¹ Where you buy within the emirate therefore decides what you can own.

Panama's constitution bars foreign individuals and companies, and nationals whose capital is wholly or partly foreign, from acquiring land within ten kilometers of the borders. ² In Georgia, the 2019 law on agricultural land lists who may own farmland; an individual foreigner appears on that list only where the land was inherited. ³ City apartments and rural land can sit under very different rules in the same country, so ask local counsel to confirm the rule for the specific parcel, not the country in general.

Financing, and property as a residence route

Local mortgages for foreign buyers vary widely, and the currency of the loan matters as much as the rate. If you borrow in one currency and earn in another, ask your CPA how exchange-rate movements on the loan would be treated before you sign.

Some countries link property to residence. Panama's Qualified Investor route, rewritten in September 2026, sets a minimum of $300,000 for a new, unoccupied, first-sale property transferred by the developer and $500,000 for a property on the secondary market, with Panama's currency listed at 1.0 to the US dollar in the Treasury's reporting rates. ^{4, 5} The property's net value after liens must meet that minimum. You may finance the amount above it, provided the financing is documented and traceable and no lien pushes the net value below the minimum, and you may hold the property through a company or private interest foundation if you evidence the beneficial ownership. ⁴

What you report to the US, and what you do not

Directly owned foreign real estate is not reported on Form 8938 or on the FBAR. Hold it through a foreign company, however, and the company itself becomes a specified foreign financial asset for Form 8938, valued including the property. ⁶ The bank accounts around the property are a separate matter. Once your foreign accounts together exceed $10,000 at any time in the year, an FBAR is required, and an account used for a deposit, a mortgage or rent counts. ⁶

Rental income from a property abroad is part of your worldwide income, which remains subject to US tax wherever you live. ⁷ Depreciation also works differently. Tangible property used predominantly outside the United States is depreciated under the alternative depreciation system, in which residential rental property is recovered over 30 years. ⁸

Local property taxes have their own rule. For individuals, foreign real property taxes are not deductible as an itemized deduction under section 164, a limit that Public Law 119-21 made permanent by removing its 2026 end date. Taxes paid in carrying on a trade or business or another income-producing activity are treated differently. ⁹ For a rental, that distinction matters.

When you sell

The main home exclusion applies to property you have owned and used as your principal residence for at least 2 of the 5 years before the sale. It can exclude up to $250,000 of gain, or $500,000 on a qualifying joint return. ¹⁰ Whether a particular home abroad meets that test depends on your facts, so plan the holding period with your CPA before you list the property.

What this means for you

Treat a foreign property purchase as three parallel workstreams: local title and ownership rules, financing and currency, and US reporting and tax. A purchase that works locally can still create US filings through the accounts and entities around it. Decide how you will hold the property before you sign.

What to do this month

• Ask local counsel to confirm that foreigners may own the specific property and in what form.
• Decide whether you will hold the property personally or through an entity, and ask your CPA what each adds to your US reporting.
• List every bank account the purchase will need for deposits, mortgage payments and rent.
• If the property supports a residence application, confirm the program's current minimums and financing rules.

Common mistakes to avoid

• Assuming the rules for city apartments also apply to land.
• Holding property through a foreign company without planning for the company's own US reporting.
• Forgetting that the local account used for the purchase counts toward your FBAR.
• Assuming local property taxes on a personal home are deductible on your US return.

The FNC angle

FNC looks at a property purchase alongside the residence, banking and holding structure around it. We help you decide how the property should be held, which accounts the purchase needs and how it fits a residence application where one is involved. One of FNC's completed engagements combined a Panama SA company and residency card with a Georgian account. Local counsel confirms title and your CPA handles the US tax treatment.