Tax and Real Estate

TAX ASPECTS OF REAL ESTATE INVESTMENT IN FLORIDA

Grace 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: [email protected]

  1. Types of Real Estate Investment
    1. Leasing – Use of property by contract for a fixed period of time, not full permanent ownership.
    2. Purchase and Sale – Permanent full acquisition of ownership of real property including land and improvements (building and other accoutrements).
  2. Tax Consequences of Leasing for non-U.S. Investor
    1. Positive advantage of leasing is a steadily generated income flow from real property.
    2. Negative factor is tax consequence and lack of appreciation.
    3. 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.
    4. U.S. has income tax dependent upon income bracket.
  3. Purchase and Sale of U.S. Real Estate by a non-U.S. person or company
    1. FIRPTA (Foreign Investor Real Property Tax Act) Definitions and Requirements:
      1. Buyer must withhold 10% of amount realized by Seller who is a non-U.S. person.
      2. Buyer or Buyer’s agent must remit 10% to U.S. Internal Revenue Service within 20 days of closing.
      3. Amount realized is sale price plus personal property (appliances) less amount of mortgage liability.
    2. FIRPTA Exemptions
      1. Non-foreign certificate – if person is U.S. citizen or has a U.S. permanent resident card (green card) and is a resident alien.
      2. 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.li>
      3. 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.