Purchasing property in the U.S. as a foreign buyer can be a smart investment—but it comes with important tax and legal implications. Being informed about these matters can help you avoid surprises and structure your investment in the most efficient way possible.
🏛️ FIRPTA: Foreign Investment in Real Property Tax Act
One of the most important regulations affecting foreign sellers is FIRPTA. This federal law requires that 15% of the gross sale price be withheld when a foreign person sells a U.S. property.
- Why? The U.S. government wants to ensure capital gains taxes are paid.
- Are there exemptions? Yes. If the property is sold for less than $300,000 and the buyer intends to live in it as a primary residence, the withholding may be reduced or waived.
📌 Tip: Always work with a tax attorney or CPA familiar with FIRPTA to explore if an exemption applies to you.
🏠 Property Taxes: Equal for All
Foreign buyers pay the same property tax rates as U.S. citizens. In Florida, rates typically range between 0.8% and 2.0% of the assessed value annually.
- Taxes are county-based, so they may vary depending on where the property is located (e.g., Miami-Dade vs. Broward).
- These taxes fund schools, public safety, and infrastructure, and are not affected by your nationality or residency.
⚰️ Estate Tax: A Hidden Risk for Foreign Buyers
This is an often-overlooked area. Under U.S. tax law, if a non-resident alien passes away owning U.S. real estate, their estate may be subject to a federal estate tax of up to 40% on property valued over $60,000.
💡 Solution: Many international investors choose to buy property via an LLC, trust, or other corporate structure. This can:
- Limit exposure to estate tax
- Add a layer of legal protection
- Offer more flexibility in succession planning
✅ Final Thoughts
U.S. real estate offers great long-term value, but international buyers should take a proactive approach to taxes and legal setup. The right advisors can help you protect your assets, comply with the law, and save money.
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