Foreign Buyers

Buying a property in Naples could be a good investment for the foreign buyer.  As the dollar value has decreased compared to other currencies, it may be a good time to invest compared to a couple of years ago.  Not only is the dollar down, but so are the property prices.

Foreign buyers, same as US citizens, will be subject to various state and county taxes at the time of purchase, annual taxes based on the value of the property, and on any value gains when the property is sold.

Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), requires that an amount equal to 10% of the selling price be withheld from a foreign seller of real estate. This amount is withheld to cover the potential taxes on the gain, but the 10% withheld can be much higher than the actual amount of tax due. The foreign seller will then need to file for a tax refund to collect the excess amount of taxes withheld. Some advance paperwork filings can reduced the amount withheld, the wait for the refund and other hassles. I recommend that shortly after the original purchase of real estate, a foreign buyer talk with an accountant, get a tax id number, and be prepare for the future. Eventually a foreign buyer will end up selling, so it is best to plan in advance.

Foreign buyers are also eligible to defer the tax on gains when they sell, by doing a ‘1031 exchange’. A 1031 exchange may be available when you sell an investment property held for over one year, and then purchase another within a specific time frame. It permits the profit from the property sold to be deferred from taxes, until a future date that the new property is eventually sold. Very specific rules need to be followed, but several companies are available to help coordinate the 1031 exchanges for a fee.

Most real estate agents can offer services for the international buyer and for a fee can take care of all the extra paperwork for you.

No related posts.

Related posts brought to you by Amazon plugin.