Foreign Buyers - Did you know ?

Foreign Buyers have special tax planning needs when purchasing U.S. real estate that can have disastrous consequences if ignored, and this planning needs to be done prior to closing. Here are some examples:

Income Tax:

Foreign owners of rental property in the U.S. must "elect" to pay U.S. income taxes on any net income derived from rental property.If this election is not made in a timely fashion, the tax could be assessed at the rate of 30 percent of the gross rent - no deduction for depreciation, interest, property taxes, interest, etc.

Sale of Property:

Buyers of property from foreign sellers are required to withhold 10 percent of the purchase price and pay it directly to the IRS at closing. This is known as the "FIRPTA" tax. It is an advance payment on the actual tax liability of the seller. The actual liability is determined when foreign sellers file a U.S. tax return, thereby receiving a refund of a portion or all of the 10 percent withheld, or paying any excess owed. In these instances, if the tax due is less than 10 percent of the purchase price, the foreign seller can apply to the IRS for a withholding certificate in advance of closing, permitting the buyer to withhold less than the 10 percent as provided in the certificate.

Gift Tax:

Avoid gifts of real estate. A foreign owner of U.S. real estate who puts his child or a third party on a deed such as joint tenant - creates a taxable gift of the interest conveyed to the child or other party.

Estate Tax:

The U.S. estate tax is assessed on the entire fair market value of the property left by a deceased foreign owner. The estate tax has very limited exemptions, deductions, and credits and is generally more onerous than the U.S. income tax. The estate tax on $1,000,000.00 condo, for example could be as much as $330,000.00. With proper advance planning, however, foreign investors can completely avoid the gift and estate tax.


The materials contained herein are intended for informational purposes only. If you need legal advice, please contact your international tax attorney.

This is the official US Government Web Site on Immigration

www.uscis.gov


This one is an Independent Organization, not a US Government Agency, but we like it because it's comprehensive.

www.usimmigrationsupport.org


This Web Page is for informational purposes only. We are not legal advisers, but if you need one to help you with immigration issues, please contact:


BROWARD COUNTY

The Law Offices of Larry J. Behar,P.A.
888 SE 3rd Avenue, Suite #400
Fort Lauderdale, FL 33316
Tel:(954) 524-8888
Fax:(954) 524-0088
http://www.immigrationflorida.com

Leaf Realty & Mortgage Corp.
3015 North Ocean Boulevard C-114
Fort Lauderale, FL 33308
Direct Line: 954-563-6300

Email : BizLeaf@aol.com
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