Foreign Nationals

foreign_imgSales between buyers and sellers in different countries can often become a sticky situation with taxes, tariffs, customs and the like. Foreign buyers and sellers of American property face similar struggles, but to a much greater degree. Their main issue comes from the 1980 Foreign Investment in Real Property Tax Act, or FIRPTA. This law came about as a solution to the problem of taxing international investors on any profits they made from property within the United States.

This piece of legislation is often a roadblock for you, a foreign investor, for one of two reasons. You may not understand the law and how it affects your investments. Or, you may feel discouraged from investing your money here because of the taxes placed on your property. Whatever the reason, Marina Title can help. We are experts on FIRPTA and can explain it in a way that is easy to understand. In addition, we can work with your unique case and make sure as much of your hard-earned money stays in your pockets.

Understanding FIRPTA

It is important to note that the Foreign Investment in Real Property Tax Act does not prevent foreign nationals from purchasing most kinds of property within the United States. Such purchases boost the American economy, and therefore the government supports it. There are restrictions when it comes to the aviation, energy, communication satellite or television/radio broadcast sectors, but anything else is fair game.

But, in return for foreign individuals and corporations being allowed to freely invest, FIRPTA does institute additional taxes. These can be rather steep in some instances. Generally, 10 percent of any sale is withheld for taxes. Some of this can be reclaimed in a tax return, but usually not all of it. However, there are ways to navigate around the law, or at least mitigate its effects.

Reducing Taxes Under FIRPTA

There are certain kinds of property that are not subject to FIRPTA taxes. If you were to buy a personal residence that costs $300,000 USD or less, and it does not generate revenue, this international tax is not applicable. In addition, certain kinds of transactions, such as a non-recognition or one in which the total amount realized is zero, also avoid the withholding tax. There are other instances that become quite nuanced. The best way to figure out what you owe (or what you will owe) is to consult an experienced attorney, such as those at Marina Title.

Some investors may choose to found a U.S.-based corporation as a way to avoid FIRPTA taxes. While this may get around the international law, there are still hefty fees and paperwork to consider. For example, the Internal Revenue Service requires all corporations to report if a foreign investor owns at least 25 percent of the company. In addition, any entity or individual related to said investor must also be reported. This can cause issues in regards to taxes and other affairs. Even so, this may be a viable option for you, one which should be discussed with your attorney.

Consulting an Experienced Real Estate Attorney

FIRPTA is a highly complex law with many facets to consider. Like any legislation, it is written in a way that someone who does not hold a law degree likely will not understand. As such, it is vital for foreign nationals who are contemplating investing in Florida real estate to find an experienced real estate attorney who can simplify the matter.

The lawyers at Marina Title are experts in all things Florida real estate. We can assist you in the purchasing process, including conducting title searches and providing escrow services for both domestic and international buyers and sellers. For more information or for a consultation, Contact us today at (305) 901-5628 or email us at

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