Florida Real Estate Often Has Hidden Purchase Costs
There are many real estate purchase costs in Florida. Refer to this point where you complete purchase as “the closing.”
Some people will also refer to “the settlement.” It’s the point at which all the papers are signed and the money is transferred from buyer to seller.
Closing costs on Florida real estate do not include sales tax on the selling price on the Florida real estate transactions. However, there can be very significant costs.
Documentary stamps on mortgage $3.50 per $1,000 of mortgage. Intangible tax of $2.00 per $1,000 of mortgage. But, if it’s a cash deal, then it doesn’t apply. Other Closing Costs Include:
- Real Estate Commissions
- Property Inspection
- Unpaid Taxes
Always get a “good faith” estimate of your closing costs before you sign the contract. Review it and all the pre-closing steps with your lawyer.
There is no tax on the purchase of property by foreign nationals.
All rental income is subject to U.S. income tax. Many double-taxation treaties to prevent paying taxesin U.S. and in the home country.
Generally, very little if any taxes are paid because there are very generous deductions:
- Mortgage interest
- Cost of 2 trips to inspect property
- These generally offset the rental income
Foreign Investment in Real Property Tax Act
On the sale, the Foreign Investment in Real Property Tax Act comes into play. This means there’s a requirement that 10% should be withheld from the sales price. The responsibility falls on the buyer who is a foreign nationals.
The buyer does not withhold if property is over $300,000 and for his home.
There may be significant profit potential in buyer certain properties called off plan, otherwise known as pre-construction property.
Now, this is just some basic information on real estate issues to be aware of in Florida. It is not formal legal advice. You may watch the video, "Foreign Florida Real Estate Investors Beware of Pitfalls" on the Lanigan & Lanigan YouTube channel.