Foreign buyers are responsible for more than 20 percent of home-sales revenues across Florida. The Florida Keys are of particular interest to international buyers due to the properties exclusive nature and the unique real estate market within the Upper, Lower, and Middle Keys. Of course, foreign buyer purchases of Florida residential properties is often more complex, requiring the skill and expertise of a qualified real estate agent. If you are an international buyer interested in purchasing property in the Florida Keys, learn what you can expect during the process and how to help ensure that the transaction runs smoothly.
Florida, along with the Keys, has become increasingly attractive for foreign real estate investors. Not only is Florida the top state in the U.S. for foreign buying, is it also an optimal location for both work and play. One of the most important factors that influence investors’ decision to buy in Florida is the location. With tropical weather year-round and spanning coastlines, it’s no secret why the Keys are a popular destination.
There are a number of other factors that also influence a foreign investor’s decision to buy in Florida. Many foreign buyers see homes in the Florida as a cheaper alternative to properties in their homeland and enjoy the warm weather to boot. The Florida Keys is also considered a wise choice for both investing and retiring due to many of the reasons already mentioned. In addition to using the homes for personal use and vacation homes, foreign investors are also choosing to buy property in order to rent it out. The rental market in the Keys is a thriving industry and makes for a great investment.
However, there are some language and cultural barriers that buyers and sellers must cross. This is due to the major differences in business practices and expectations in the U.S. compared to foreign countries. However, it is possible to successfully close transactions in the Upper, Lower, and Middle Keys without issue. An experienced real estate agent can help streamline the buying process to ensure that each party is fully satisfied with the result. Good realtors will also work on your behalf and use their resources to ensure that you find a property that meets your unique needs.
Florida has long been a popular destination for foreign buyers looking to snatch up valuable real estate. Both residential and commercial investments are in demand by international buyers looking to make Florida their home or to start or grow their business. Research shows that Florida currently has the largest number of foreign real estate investors in the United States. A whopping 41 percent purchase vacation homes in Florida, while 25 percent purchase for vacation homes and rental properties. Another 23 percent invest in rental properties alone.
Foreign nationals have the option of purchasing real estate in the Florida Keys for personal use in their real name or in the name of a LLC or corporation. However, to ensure that the purchase is valid, international buyers must follow a set of specific rules and regulations found under the Foreign Investment in Real Property Act, or FIRPTA. Under this Act, all profits made from any sales of a United States property by a foreign national is subject to taxation. However, there are some exceptions to this rule.
A sale may be exempt from taxation if the seller is a United States resident alien and has his or her own tax identification number. Taxation may also be exempt for a foreign national if the price of the property is less than $300,000. The buyer must also use the property as his or her personal home at least half of the time within two years of the closing date. The final exception is associated with the IRS, or Internal Revenue Service. Under this exception, the seller must have received a withholding certificate directly from the IRS. If a buyer does not meet any of these exceptions, the buyer must then withhold 10 percent of the sale price and pay it to the IRS.
In addition to securing a qualified real estate agent, you will want to take the time to determine which type of property you would like to purchase. From single family homes to oversized condo buildings, there are properties to meet the needs of all investors. In addition to the type of home you want, consider the location. Properties can be found throughout the Upper, Middle, and Lower Keys, many directly on the beach while others are further away. Different islands also offer different ways of living. While the Upper Keys are more prone to tourists, residents in the Lower Keys live a slower and more relaxed way of life.
You will also want to consider your budget when purchasing property in the Florida Keys. Start by putting together a financial plan that outlines all of the costs associated with the purchase. Understand how much you are able to pay each month including insurance, taxes, and other applicable fees. Once you know how much you are able to spend, it’s time to look at homes. Your real estate agent can match you with properties that meet your needs and budget in your preferred location.
Know that when a foreign investor purchases real estate in the Florida Keys they must follow specific filing requirements. If a U.S. corporation or foreign business owns property whose ownership by a foreign national exceeds 10 percent, they must obtain a registered office in Florida and have an agent on file with the Department of State. If there is any sales tax on rent, the foreign national must also register as a sales tax dealer with the Department of Revenue. Want to learn more about international buying in the Florida Keys? Contact an experienced local real estate agent.