It’s hard to deny the appeal of South Florida, and its booming real estate market is certainly a reflection of that. For foreign investors looking to land property along the SoFla coast, there are some critical considerations they should think through to ensure a smooth and profitable experience. 

From tax implications to ownership structure and everything in between, here are some key areas to tune into as you prepare to purchase real estate in the U.S. as a foreign investor. If you have questions about Florida real estate law or need legal representation, contact our firm at the Law Offices of Alex D. Sirulnik, P.A.

Tax Considerations as a Foreign Investor

International real estate investors need to understand their U.S. tax obligations so they avoid unwanted surprises down the road. A key one to familiarize yourself with is the Foreign Investment in Real Property Tax Act (FIRPTA). 

FIRPTA is a federal law that mandates buyers withhold a portion of the sale price when a foreign investor sells U.S. property. This generally amounts to 15% of the gross sale price, and this amount serves as an advance payment on potential tax obligations. On a $500,000 sale, for example, that means the buyer must withhold $75,000 (15% of $500,000) and send it to the IRS. 

FIRPTA rules are complex and come with exceptions, so before purchasing or selling property as a foreign investor, be sure to consult with a real estate attorney so you can be most strategic with your investment. 

Ownership Considerations as a Foreign Investor

Another important decision investors need to make before closing on a deal is whether to buy the property as an individual or through an entity such as an LLC, corporation or trust. There are pros and cons to both approaches, though one of the primary advantages of doing business under an entity name – and this includes investing in real estate – is that it offers a level of personal asset protection you don’t get as an individual investor. If there is a lawsuit or creditor claim made against the property owners, the business entity will be liable but your personal assets should be shielded. 

As you weigh your decision, consider your unique situation and goals before determining the best investment strategy for you. 

Closing Considerations as a Foreign Investor

People come from all over the world to purchase real estate in South Florida, and at times they can’t be physically present at closing. In these instances, there are typically two closing options: mail-away closings and Remote Online Closings (RONs). You can read more about the differences between the two options here.

Mail-away closings enable buyers and sellers to complete a real estate transaction without being physically present at their title agent’s office. They are typically most useful when the buyer is financing the purchase and when a buyer is not living in the United States and cannot get approved for a Remote Online Closing. 

Despite being a fairly common practice in South Florida real estate transactions, however, they do add a layer of complexity. To ensure a smooth process for your mail-away or international closing, partner with an experienced real estate attorney and title company that can make the entire closing process seamless.  

Remote Online Closings are another option, but if the seller is not a U.S. citizen, they need to get pre-approval for a RON closing with the title company’s underwriter, for example.  

Contact Us at Sirulnik Law and ADS Title Services, Inc.

Investing in Florida real estate comes with challenges and opportunities for international buyers and sellers. To make the most of your strategic investment, work with trusted real estate and legal professionals who can help ensure that your property purchase goes smoothly and remains compliant with all relevant regulations. 

Our attorneys at the Law Offices of Alex D. Sirulnik, P.A. are also licensed title agents backed by national title insurance underwriters, so we can address all your real estate law and closing questions. We have an in-house title insurance company to make your mail-away or remote online closing quick and stress-free. Contact us to learn more.