A disciplined investor plans the exit before buying. For international owners of U.S. real estate, the main ways to realize value are: sell outright, defer tax with a 1031 exchange, pull equity via cash-out refinance, or simply hold and compound. Each has different tax and cash-flow consequences — and the right one depends on your goals.
1. Sell Outright
The simplest exit: sell and take the proceeds. For foreign sellers, plan for FIRPTA withholding at closing (an advance against your U.S. tax, reconciled on your return) and for capital gains treatment in both the U.S. and your home country. Time the sale around your tax picture, not just the market. See Brazil–U.S. taxation for real estate investors.
2. 1031 Exchange (Defer the Tax)
Instead of selling and paying tax, roll the proceeds into another U.S. investment property and defer the capital gains — repeatedly, if you like, compounding gains across a growing portfolio. Foreign investors can use it, with FIRPTA coordination. See the full mechanics in the 1031 exchange guide.
3. Cash-Out Refinance (Access Equity Without Selling)
If the property has appreciated, a cash-out refinance lets you pull equity as a loan — generally not a taxable event — while keeping the asset and its income. It is a way to fund the next purchase without triggering a sale. Terms depend on your profile and rates; see foreign-national mortgage rates.
4. Hold Long-Term (Compound and Pass On)
Often the most powerful "exit" is not exiting: hold the dollar-denominated, income-producing asset for decades and pass it to heirs. This requires estate planning to handle U.S. rules for foreign owners — see estate planning for foreign owners of U.S. real estate.
How Do You Choose?
- Need liquidity now? Sell (plan for FIRPTA).
- Upgrading/diversifying the portfolio? 1031 exchange.
- Want cash but keep the asset? Cash-out refinance.
- Building generational wealth? Hold, with estate planning.
Frequently Asked Questions
What is FIRPTA and when does it apply?
It is withholding on the sale of U.S. real estate by a foreign person — an advance against your tax, reconciled later. Plan for it before listing.
Can I avoid tax by doing a 1031?
You defer, not eliminate, the tax. The gain carries into the replacement property.
Is a cash-out refinance taxable?
Generally loan proceeds are not taxed as income, but confirm with a cross-border CPA.
"Amateurs plan the purchase. Professionals plan the exit before they buy." — Buldora Research Team
Plan your entry and exit with cross-border specialists. Educational only, not tax advice.
