Florida Real Estate Investment: Foreign National Basics

Florida real estate has always fascinated foreign investors. With foreign investment of 41% in vacation homes, 23% investment in rental property and 25% investment in a dual use purchase (rental property/vacation home), Florida has the largest number of foreign real estate investments in the U.S, as per the recent data of National Association of Realtors, Florida.

Taxes on foreign investment

Under the Foreign Investment in Real Property Act (FIRPTA), any profits made from the sale of U.S real estate property purchased by foreign nationals are subject to taxation.

Tax on rental property

Florida real estate purchased by foreign nationals for leasing purposes are subjected to taxation. Foreign nationals can pay 30% of gross receipts for real estate property purchased for leasing purposes. Apart from this, they can pay regular U.S income tax rates on net income from the purchased real estate property. This can be done by filling the form 4224 with the IRS.

Tax on investment property

Foreign nationals in Florida purchasing large tracks of properties in the US must report these purchase to the US Department of Commerce, under the International Investment and Trade in Services Survey, Act.

Information that must be reported to US department of commerce is inclusive of names and addresses of owners, buyers and sellers. For property over 200 acres or property purchase price of more than $ 1 million, foreign nationals are required to report to the U.S. Department of Commerce.

There are three exceptions

  1. Foreign nationals are exempted to pay the tax, if the seller is a resident alien and has a tax identification number.
  2. In case where the sale price of real estate is less than $300, 000 and foreign national has used this property as a personal residence. For the next two years after closing, the purchased real estate property should be used as personal residence at least 50% of the time.
  3. He/she will be exempted to pay tax in Florida, if the seller has obtained a withholding certificate from the IRS.

Foreign national financing in Florida

Non-U.S. borrowers can avail foreign national financing in Florida from lenders, banks or any other financing organizations, for purchasing real estate properties. By buying another investment property under the section 1031 of the IRS codes, foreign investors are also entitled to defer capital gains taxes in the U.S.

Many foreign nationals opt to borrow loans from foreign national mortgage lenders in Florida, due to its extremely low rate of interest. Most of the applicants for foreign national financing in Florida are from the United Kingdom, Brazil, Mexico, South America, Canada and Spain.

For more information regarding foreign national real estate investment financing; please contact the experts at Park West Capital a Miami, FL based company with direct focus in this market. Contact: 800–869–4901 or via email at: Info@parkwestcapital.com

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