Buying Property in United States: What It Actually Costs
Whether you're buying your first investment property or expanding your portfolio, understanding all the upfront and ongoing costs is essential. This guide walks you through every tax, fee, and expense you can expect — so there are no surprises on transfer day.
Budget 8–10% above the purchase price for taxes and fees when buying property in United States. The calculator below gives you an exact figure for your situation.
Transfer Tax
The US has no federal transfer tax. Rates vary by state and locality. This estimate uses a ~0.1% national average.
Transfer Tax rates vary depending on the property type, buyer classification, and region. Use the calculator for an exact estimate.
What You'll Pay at Transfer
On top of the transfer tax, there are several legal and administrative fees that you need to budget for. Here's what to expect.
Transfer / conveyancing fees
These fees apply whether you're paying cash or taking out a bond.
Bond registration fees (only if you're taking a bond)
If you're financing your purchase with a home loan, the bank's bond also needs to be registered at the Deeds Office. These are the fees for that process.
Agent Commission
Total real estate agent commission, typically 5–6% of the sale price. Post-2024 NAR settlement, the buyer's agent fee may be separately negotiated. Commission is traditionally paid by the seller from proceeds.
Your Monthly and Annual Costs as an Owner
The purchase price is just the beginning. As a property owner in United States, you'll have recurring costs that eat into your rental income. Knowing these upfront helps you model realistic returns.
- per yearProperty TaxAnnual property tax assessed by the local government. National average is ~1.1% of assessed value, but ranges from 0.27% (Hawaii) to 2.23% (New Jersey).Typically escalates ~2% per year
- per monthHOA FeesMonthly homeowners association fees, if applicableTypically escalates ~3% per year
- per yearHomeowner's InsuranceAnnual homeowner's insurance premium. Typically $1,000–$3,000/year depending on property value and location.Typically escalates ~3% per year
- per yearMaintenance ReserveAnnual maintenance and repair budget. Rule of thumb: ~1% of property value per year.Typically escalates ~3% per year
Additional costs for Condo / Apartment properties
- HOA / Condo FeesMonthly HOA or condo association fees covering common area maintenance, insurance, and amenities. Typically $200–$600/month.Charged per month
Don't forget escalation: Most recurring costs increase every year. Budget for 3–6% annual increases on rates, insurance, and maintenance. The ROI calculator lets you set a custom escalation rate for each expense.
When You Sell: Capital Gains Tax
United States taxes capital gains at separate, lower rates than ordinary income. If you hold the property for more than 12 months, you qualify for long-term rates — which are significantly lower than short-term rates.
Long-term capital gains rates
| Your income level | CGT rate |
|---|---|
| Low Income | 0% |
| Middle Income | 15% |
| High Income | 20% |
Primary residence exclusion: If you lived in the property as your main home for at least 2 of the past 5 years, up to R 250 000,00 of your gain may be completely tax-free. Married couples filing jointly may qualify for a higher exclusion — always confirm with a tax advisor.
Other taxes when you sell
Estimated tax on accumulated depreciation for rental/investment property. Taxed at 25% on the capital gain as an approximation (actual basis is depreciation claimed). Does not apply to primary residences.
Does not apply to: residential
Additional 3.8% surtax on net investment income for taxpayers with MAGI above $200K (single) or $250K (married). Applied to the full capital gain as an estimate.
Costs of Selling Your Property
When you eventually sell, there are costs that come out of your sale proceeds before you see the cash. Here's what to factor in when modelling your exit.
Buying as a Foreign National
Foreigners can freely buy property anywhere in the United States — there are no restrictions on foreign ownership of real estate.
However, there are some important tax and financing differences to be aware of:
- 1. You'll need an ITIN: An Individual Taxpayer Identification Number is required to file US tax returns on rental income and capital gains. Apply via IRS Form W-7 before or shortly after your first purchase.
- 2. FIRPTA withholding when you sell: Under the Foreign Investment in Real Property Tax Act, the buyer withholds 15% of the sale price when purchasing from a foreign seller. This is a deposit against your US tax liability — you claim it back (or pay any difference) when you file your US tax return.
- 3. Consider an LLC: Many foreign investors buy through a US LLC for liability protection and simplified tax filing. There are setup costs, but it can make ongoing compliance much easier — especially if you own multiple properties.
- 4. Financing options: Most conventional mortgages (Fannie Mae / Freddie Mac) are unavailable to foreign nationals. Look at DSCR loans instead — these are approved based on the rental income of the property, not your personal income or credit score.
Which Property Type Is Right for You?
Different property types come with different income potential, vacancy assumptions, and cost profiles. Here's how the main types compare in our calculator defaults for United States.
- Agent commission
- 5.50%
- Vacancy rate
- 7%
- Rent escalation
- 3.5% p.a.
- Agent commission
- 5.50%
- Vacancy rate
- 7%
- Rent escalation
- 3.0% p.a.
- Agent commission
- 6.00%
- Vacancy rate
- 8%
- Rent escalation
- 3.0% p.a.
- Agent commission
- 5.50%
- Vacancy rate
- 25%
- Rent escalation
- 3.5% p.a.
Ready to Run the Numbers?
Our free calculator puts all of these costs together in one place — transfer duty, closing fees, ongoing expenses, bond repayments, and your projected exit return. Takes about 2 minutes.
Use the free United States ROI calculator →