introduction
Florida’s real estate market is renowned globally, attracting investors and homebuyers from foreign countries. For foreign nationals looking to purchase property in Florida, going through the process can seem daunting. However, with the right guidance, buying real estate in the Sunshine State is easily doable.
We did a small guide step by step.
Step 1: finding the right Real Estate Agent and Title Company
There are thousands of realtors in the USA.
Many of them are doing it part-time, or just as a hustle.
It’s important to work with a full-time agent who spends time, effort, and energy focusing on his job, and has great reviews to ensure a smooth experience and finds the right property for you.
Especially for first-time buyers residing abroad, the purchase process of a property in Miami can be a nightmare. Engaging the expertise of a seasoned title attorney in Florida is essential. We are professionals specialized in assisting foreign buyers, providing invaluable guidance throughout the whole transaction process.
Our real estate agents have multi-years track record of sales and purchases, and know the Miami real estate market. We are fluent in Italian, English, French, Spanish, and Portuguese, so we can offer tailored assistance, ensuring a seamless experience for overseas buyers.
Step 2: cash buyers or purchasing with a mortgage?
In Miami, cash buyers are a lot more common compared to the rest of the United States.
Recent statistics from the NAR show that about 29% of home sales in the U.S. are made in cash. In Miami, cash sales made up 41.2% of all closed sales in September 2023, up from 39.5% in September 2022. Additionally, cash sales in Miami are 42.1% higher than the national average. Overall, across the country, around one-third (33.4%) of home purchases are made in cash. In Miami, the percentage of cash sales is 40.9%. Furthermore, in Miami, the percentage of cash sales has increased compared to the previous year.
Obtaining a mortgage in the US as a non-resident can be challenging due to limited credit history. Typically, having at least 30% of the property’s value for the down payment is advisable. Alternatively, leveraging existing real estate through a home equity line of credit (HELOC) can facilitate cash purchases, enhancing negotiation flexibility with sellers.
Step 3: Do I Need a Visa to Buy Property in the USA?
Foreign nationals are permitted to buy property in the US without needing a specific visa. The US Citizenship and Immigration Services (USCIS) grants individuals the same property ownership rights as US citizens. However, it’s essential to note that purchasing property does not impact immigration status or visa eligibility. Working closely with a reputable title company can help assess options and devise a suitable purchasing strategy.
To purchase property in the United States, a specific visa is not required. However, if you wish to obtain permanent residency or citizenship through property investment, you may consider the EB-5 investor visa. This visa requires an investment of $500,000 to $1 million in a US enterprise and the creation of 5-10 new jobs. Additionally, no special documents are required to own property in Florida; transferring funds to the US for investment is sufficient.
On the other hand, in Italy, purchasing property by foreigners can lead to permanent residency or citizenship after five years of residency in the country. However, buying property in Italy by non-residents can entail financial risks related to property valuation and legislative requirements. To benefit from tax advantages when purchasing the first home in Italy, a valid residence permit is necessary.
Step 4: Tax rules for foreigners buying properties in the USA
Understanding the tax implications for foreigners in the United States requires a grasp of the distinction between residents and non-residents for tax purposes. Residents are taxed on worldwide income, whereas non-residents are taxed only on income from US sources. Residents can file tax returns with the “married-filing-jointly” status and utilize foreign tax credits, while non-residents primarily pay taxes on income from US sources.
Owning property in Florida entails various expenses beyond the purchase price. These may include property taxes, insurance, maintenance, and utility costs. Property owners who opt to rent out their properties must also consider income tax obligations.
For foreign property owners in the United States, there are several tax implications to consider. Here are some key points:
Income Taxes
Foreigners must pay US income taxes. Rental incomes are subject to a fixed tax withholding of 30% unless reduced by an agreement.
LLC Ownership
Owning property through an LLC doesn’t eliminate income tax, but depreciation and management expenses can serve as tax shields.
FIRPTA Withholding
When a foreigner sells property in the US, they must pay capital gains taxes with a FIRPTA withholding rate of 10%.
Using LLCs
Almost every foreign individual buyer uses the LLC to buy a property in Miami. Buying through an LLC can offer tax benefits and legal protection. US legal entities owned by foreign citizens are not considered foreign for US tax purposes.
International Tax Treaties
The US has tax treaties with many countries that allow foreigners to be taxed less or be exempt from US taxes.
ITIN and Tax Filing
For LLC members residing in Italy, an Individual Taxpayer Identification Number (ITIN) and income declaration are required.
Obtaining an Individual Tax Identification Number (ITIN) is necessary for foreign nationals dealing with US tax requirements.
For foreign property owners in Miami, it’s crucial to consider recent legal restrictions impacting property purchase and ownership. A new Florida law, Senate Bill 264, effective since July 1, 2023, limits property ownership by individuals and entities associated with certain countries, including China, Russia, Iran, North Korea, Cuba, Venezuela, and Syria. These individuals and entities are termed “foreign principals,” and the countries are labeled as “foreign countries of concern.” For instance, foreign principals associated with China are entirely prohibited from buying or acquiring real estate interests in Florida.
Step 5: choosing the right Title company
Title and Escrow Services: Essential Steps for Foreign Buyers in Florida
For foreign nationals aiming to invest in Florida real estate, enlisting the services of a reputable title and escrow company is not just important—it’s a critical step toward a safe and prosperous transaction. These companies play a vital role in ensuring the security and success of property transactions.
Choosing the Right Title Company
Begin by conducting thorough research to identify respected title companies with a proven track record in Florida.
Verify their credentials, licenses, and experience in handling transactions involving international buyers.
Seek recommendations or read client reviews to gauge their professionalism and effectiveness.
Understanding the Role of Escrow
An escrow company acts as a neutral intermediary that safeguards funds and important documents throughout the transaction process.
They ensure that all sale conditions are met before releasing funds to the appropriate parties, providing security for both buyers and sellers.
Working with Experienced Professionals
Establish close partnerships with experienced professionals such as real estate agents, attorneys, and financial advisors to navigate the complexities of property acquisition in Florida.
Maintain open communication with your chosen title and escrow company to address any questions or concerns during the transaction.
top 4 faqs to ask before choosing a Title Company
Navigating a property transaction in Florida, whether buying or selling, involves numerous complexities and legal considerations. Engaging with an experienced title company can alleviate many concerns and ensure a smoother process.
Here are four essential questions to ask:
- What Does a Florida Real Estate Closing Entail? Understanding the intricacies of a real estate closing is crucial for both buyers and sellers. A reputable title company will orchestrate the closing process, ensuring all necessary documents are in order and any outstanding issues are addressed before the scheduled closing date. At the closing, parties will sign conveyance documents, and loan-related paperwork (if applicable), and review the Closing Disclosure outlining fees. It’s essential to resolve any disputes or negotiations well in advance to avoid delays.
- What Documentation is Required for Closing? Both buyers and sellers must present valid photo identification at closing. Buyers may also need secondary identification, especially if financing is involved. The title company will handle the preparation of all necessary forms and documentation, streamlining the process for the parties involved.
- What is the Timeline for a Real Estate Closing in Florida? The duration of a real estate closing can vary based on several factors. Adequate preparation is key to expediting the process. Generally, with all documentation in order, the closing itself typically takes around an hour. However, resolving any outstanding issues beforehand is crucial to avoid delays. Partnering with an attorney-owned title company can enhance efficiency and reduce stress throughout the process.
- How Much Money is Required at Closing? Understanding the financial aspects of closing is essential for buyers. Before signing any documents, buyers should have a clear understanding of the total amount due at closing. This includes any deposit placed in escrow and the loan amount (if applicable), which will be deducted from the final cash needed. Requesting an estimate early in the transaction can help buyers prepare accordingly.
Contact us for a smooth and safe transaction. Our partners in Miami are ready to assist you!
