South Florida continues to draw investors from across the globe – and for good reason. With its vibrant economy, desirable climate and strong rental demand year-round, it’s one of the most dynamic real estate markets in the U.S. But beyond its lifestyle appeal, the Sunshine State also offers meaningful tax advantages that make investing here especially attractive to foreign buyers . From income tax savings to depreciation benefits, understanding these opportunities can help maximize profitability and protect your investment.

Below, we break down key tax benefits and critical considerations for foreign investors looking to acquire property in Florida.

Tax Considerations for International Investors

Before jumping into some of the tax advantages that come with investing in Florida real estate, it’s critical for international buyers and sellers to understand the Foreign Investment in Real Property Tax Act (FIRPTA). FIRPTA, which was enacted in 1980, is a federal law that requires buyers of U.S. real estate to withhold a portion of the sales price (typically 15% of the gross sale price) when purchasing property from a foreign seller.

For example, if a foreign seller sells a Florida property for $1M, the buyer must withhold $150,000 and remit it to the IRS as a prepayment of potential tax obligations. FIRPTA ensures that taxes on U.S. property sales by non-residents are collected appropriately, but it can be complex, and exceptions may apply depending on how the property is used or how ownership is structured.

Consulting a Florida real estate attorney early in the process can help ensure you’re managing FIRPTA correctly and not overpaying.

Tax Benefits for International Investors in Florida Real Estate

Now on to the good stuff. Here are several tax advantages Florida offers to domestic and international investors.

  • No state income tax – Florida is one of the few U.S. states that does not impose a state income tax, which means investors can retain more of their rental income and profits compared to properties in other states.
  • Favorable property tax rates – Florida’s property tax rates are generally lower than the national average, especially relative to the high property values found in desirable areas like Miami, Fort Lauderdale and Palm Beach.
  • Capital gains opportunities – When structured strategically, such as by purchasing through an LLC or corporation, foreign investors may minimize U.S. capital gains taxes or potentially defer them through tax treaties between the U.S. and their home country.
  • Tax treaties and withholding reductions – Many countries have tax treaties with the U.S. that can reduce or eliminate double taxation and lower withholding rates on income or sales proceeds under FIRPTA.
  • Depreciation deductions – Investors renting out their Florida properties can deduct depreciation on buildings and improvements, which helps offset rental income and lower taxable income.
  • Like-kind exchanges (a.k.a. 1031 exchange) – Foreign investors who structure their U.S. real estate ownership properly may be eligible to use section 1031 exchanges to defer capital gains taxes when selling one investment property and reinvesting in another. Deferring your tax payment by enacting a 1031 allows your investment to grow tax-deferred until you decide to eventually sell your property for cash many years down the road. There is no limit to the number of 1031 exchanges an investor can do.

Contact Us with Questions About Investing in Florida Real Estate

Florida real estate offers strong opportunities for international investors, but success starts with proper structure, due diligence and tax planning. Partnering with a real estate attorney and title company experienced in international transactions ensures your deal remains compliant, efficient and stress-free, no matter where you’re located.

At the Law Offices of Alex D. Sirulnik, P.A. and ADS Title Services, Inc., we help foreign investors navigate every step of the process from FIRPTA compliance and entity formation to title review and closing coordination. Contact us today to schedule a consultation.