Buying Florida Real Estate as a Foreign National

Buying Florida Real Estate as a Foreign National

Foreign nationals are able to purchase Florida real estate for personal use — either in their own names or the name of a corporation or LLC — just like any American citizen. However, when selling U.S. property, foreign nationals must follow certain rules under the Foreign Investment in Real Property Act (“FIRPTA”).

Under FIRPTA, any profits made from the sale of U.S. property by a foreign national can be taxed. There are three exceptions that would exempt the sale from taxation:

• If the seller is a non-resident alien and has a tax identification number;
• If the sale price is less than $300,000 and the buyer will use the property as a personal residence at least 50% of the time for the next two years after closing; or
• If the seller has obtained a withholding certificate from the IRS.

If none of these exemptions apply, the buyer must withhold 10% of the sale price to pay as tax to the IRS.

Foreign nationals are also entitled to defer capital gains taxes in the U.S. by purchasing another investment property under Section 1031 of the IRS Code. The actual tax treatment of foreign real estate buyers may depend on any existing tax treaties between the U.S. and their home countries. This can be a complicated area, which is why it is advisable for foreign investors to consult with an experienced Florida real estate attorney.

Investment Property

Under the International Investment and Trade in Services Survey Act, foreign nationals purchasing large tracts of real estate in the U.S. must report that purchase to the U.S. Department of Commerce.

The information that must be reported includes the names and addresses of buyers, sellers and owners of more than a 50% interest and financing information (income, expenses, etc.) about the property. More reporting details are required for property over 200 acres or property with a purchase price of more than $1 million.

Rental Property

Foreign nationals purchasing Florida real estate as rental properties must pay U.S. taxes on rental income. Foreign landlords have a choice on how to be taxed:

• Pay 30% of gross rental receipts; or
• Pay regular U.S. income tax rates on net income from the property by filing a Form 4224 with the IRS.

Florida Requirements

Florida has certain filing requirements for foreign nationals and legal entities purchasing real estate here. Any property owned by a foreign business entity or U.S. corporation whose ownership by foreign nationals exceeds 10% must have a registered Florida office and agent on file with the Florida Department of State. If sales tax on rents is collected, a foreign national must register as a sales tax dealer with the Florida Department of Revenue.

The attorneys at Jurado & Farshchian, P.L., combines their knowledge and experience in the South Florida real estate market with a commitment to personalized, detail-oriented legal services.  Contact one of our experienced Florida attorneys at (305) 921-0440, or email us at info@jflawfirm.com.

 Share

The post Buying Florida Real Estate as a Foreign National appeared first on Jurado & Farshchian, P.L. Business Lawyer, Real Estate Lawyer, Immigration Lawyer.