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TAX ASPECTS OF REAL ESTATE INVESTMENT IN FLORIDAGrace Anne Glavin, Attorney
Grace Anne Glavin, P.A.
1340 Tuskawilla Road
Winter Springs, FL 32708
Telephone: (407) 699-1110
Fax (407) 699-1165
Website: graceglavinlaw.com
Email: grace@graceglavinlaw.com-
Types of Real Estate Investment
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Leasing – Use of property by contract for a fixed period of time, not full permanent ownership.
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Purchase and Sale – Permanent full acquisition of ownership of real property including land and improvements (building and other accoutrements).
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Tax Consequences of Leasing for non-U.S. Investor
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Positive advantage of leasing is a steadily generated income flow from real property.
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Negative factor is tax consequence and lack of appreciation.
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Non-U.S. investor pays flat 30% of income as federal income tax, while U.S. investor pays graduated rate of income tax – so some advantage to non-U.S. investor over U.S. investor.
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U.S. has income tax dependent upon income bracket.
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Purchase and Sale of U.S. Real Estate by a non-U.S. person or company
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FIRPTA (Foreign Investor Real Property Tax Act)
Definitions and Requirements:
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Buyer must withhold 10% of amount realized by Seller who is a non-U.S. person.
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Buyer or Buyer’s agent must remit 10% to U.S. Internal Revenue Service within 20 days of closing.
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Amount realized is sale price plus personal property (appliances) less amount of mortgage liability.
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FIRPTA Exemptions
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Non-foreign certificate – if person is U.S. citizen or has a U.S. permanent resident card (green card) and is a resident alien.
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Residency exemption – property acquired for non-investment purposes, amount realized must be $300,000 or less, must reside at least 50% of days property is in use during the first 2 years after acquisition.
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Maximum tax liability – need U.S. taxpayer identification number to file for withholding certificate. Withholding tax cannot exceed Seller’s maximum tax liability.
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