Closing on a new property in Florida is an exciting day for buyers, but the road to closing can be long and it is certainly complex, especially for foreign buyers. While the process is similar to domestic real estate closings in many respects, foreign nationals have a few additional hurdles to jump over before property ownership is officially transferred.
Here are some unique considerations foreign buyers should keep in mind when investing in a Florida residence. If you have questions about Florida real estate law, contact our firm at the Law Offices of Alex D. Sirulnik, P.A. and ADS Title Services, Inc.
Financing and Purchasing Considerations for Foreign Buyers
Before closing on a property, foreign investors in Florida must obtain a taxpayer identification number (TIN) or individual taxpayer identification number (ITIN) from the IRS to comply with tax regulations for U.S. property owners. This number is required for any tax-related filings, including withholding under the Foreign Investment in Real Property Tax Act (FIRPTA) when the property is later sold.
FIRPTA mandates that foreign sellers withhold a portion of the gross sale price (typically 15%) of their real estate investment and remit that amount to the IRS as a deposit for any capital gains tax that may be due upon sale. Being aware of FIRPTA regulations is imperative as the financial implications can be significant.
Additionally, international buyers should keep in mind that financing investments in the U.S. can come with additional barriers such as higher down payments and interest rates. There may also be additional expenses in the form of currency exchange rates, international transfer fees and closing costs. Work with a trusted financial institution familiar with international real estate transactions to help save time and money.
Closing Considerations as a Foreign Investor
In terms of closing day, there are typically two closing options for foreign investors who cannot be present for an in-person closing: mail-away closings and Remote Online Closings (RONs).
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, 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. You can read more about the differences between the two closing options here.
Contact Us at Sirulnik Law and ADS Title Services, Inc.
Before closing on a property in Florida, we advise connecting with an experienced real estate law attorney and title company that can ensure the property has a clear title and is free from liens or encumbrances. Our teams at the Law Offices of Alex D. Sirulnik, P.A. and ADS Title Services, Inc. are here to answer your questions and expertly guide you through the closing on your Florida investment. Contact us to learn more and schedule a consultation.
