Foreign National Buyers in Florida

According to the National Association of Realtors (NAR), Florida has the largest number of foreign real estate investors in the US with 41% purchasing homes, 21% making a dual use purchase (vacation home/rental property) and 22% investing in rental property.

Foreign nationals are able to buy real estate in the US without any involvement by any US government agency. It should be noted that buying real estate in the US does not provide foreign nationals with any rights or privileges regarding legal status. For those interested in staying in the US longer than allowed by a standard visa, consultation with an immigration attorney to fully understand applicable guidelines is recommended.

Foreign buyers are eligible to buy single family homes, condominiums and town homes as well as duplexes, triplexes and quadraplexes. Coops often have rules prohibiting foreign ownership. Foreign buyers can purchase property in their own names or through a legal entity such as a limited partnership, corporation, joint venture, trust or limited liability company. The structure by which a buyer purchases property can have dramatic tax consequences. Unless for a homestead property exemption, it is the opinion of leading experts that a buyer should not purchase a home in their own name to limit liability, minimize taxes and ensure confidentiality.

When it comes to selling US real estate, foreign nationals who has not implemented a structure that strictly adheres to the IRS exceptions to foreign withholding tax must adhere to rules under the Foreign Investment in Real Property Act (FIRPTA). Under FIRPTA, profit made from the sale of US real estate by a foreign national is subject to taxation. As of February 2016, 15% of the gross purchase price is withheld regardless if any profit was made. However, if the purchase price is less than $1M and the buyer intends to use the property as permanent residence for at least 6 months for the next two years then the tax rate drops from 15% to 10%. There are exceptions that would exempt the sale from taxation including if sales price is <$300K and the buyer will use the property as personal residence for at least 50% of the time for the next two years, seller is a non-resident alien and has a tax identification number or the seller has retained a withholding certificate from the Internal Revenue Service (IRS).

Foreign nationals are also able to defer capital gains tax in the US by purchasing another similar investment property under Section 1031 of the IRS Code. There are strict guidelines that must be adhered to with Section 1031 Exchanges and the use of an experienced real estate attorney is highly recommended.

Purchasing real estate in the US can be a worthwhile endeavor but foreign buyers should use a full-time real estate attorney to ensure they secure their dream property while minimizing risk and tax liability.

If you are a foreign national looking to invest in business or Real Estate in Florida call Loevin Law Group, PA for your attorney consultation.