Buy Property in Florida USA
Video link: https://youtu.be/buSl4HdgkYk
More property investors are looking to buy real estate property investments in Florida in the United States.
There are many investments and tax benefits.
What are the basics of buying property in Florida?
As property accountants serving thousands of UK landlords that purchase buy to let properties, we know that investing in property in Florida is popular.
There is no special US visa requirement for foreign nationals buying Florida real estate.
Since the pandemic, homes are selling in Florida at record prices, on average increasing by 15% year on year across every type of property.
One big difference from other countries is the Multiple Listing Service (MLS).
This is an online database where you can see every property for sale in any area, from every agent, without needing to contact them individually.
In Florida, there are buyers’ agents and sellers’ agents.
As a buyer, you normally sign up with just one agent and they go to the sellers’ agents to find you a property.
If you buy, the commission is paid from the sales price and divided between both agents.
The exact processes and costs vary between States.
In some states, a lawyer is vital while in others it isn’t.
As an overseas buyer, it makes sense to have an independent lawyer working for you in Florida.
It is also important to talk with a tax and inheritance specialist about your property ownership before making any offers in Florida.
Americans are keen on the Open House approach, with all viewers invited at the same time.
When you have chosen a property, you make an offer via your own realtor to the seller’s agent or the seller.
Between offer and counter-offer an agreement on price is usually reached and other conditions are put in place, such as the deal is contingent on getting a mortgage.
While it is still a verbal offer, you can withdraw or the seller can take a higher offer.
Within the next 10 days and after initial paperwork has been received, the lawyers on both sides should have made basic checks and resolved any issues.
The buyer is then ready to sign the contract and pay 10% of the purchase price in an escrow account held by the seller’s lawyer.
This is non-refundable except in circumstances agreed between the parties.
Closing normally happens after 30 days as agreed by both parties.
The seller will have proved that the title is clean, that they are the genuine owner of the property and there are no liens.
The buyer is still recommended to take out title insurance.
A final visit to the property will be undertaken to carry out a visual check. The buyer will pay the balance of the purchase price plus all taxes and fees.
After signing the keys will be handed to the new owner.
Buying, owning and selling property in the USA is straightforward for residents and non-residents given the lack of federal restrictions on the property market.
Each state may have laws or taxes that buyers need to be aware of beforehand.
When foreigners buy property in the USA they do not need to be residents but they do have to register with the IRS for an Individual Taxpayer Identification Number (ITIN) if taking out a mortgage.
Overseas buyers will need to budget for the Foreign Investment in Real Property Tax Act (FIRPTA).
This is a levy that requires sellers to withhold a refundable 15% of the sale price for the IRS.
It may also be worth considering whether buying a property in the USA through a company could be beneficial for Estate Tax purposes.
Is buying a house in Florida USA a good investment?
For many, buying a house in Florida is considered a great investment.
Prices may be rising, but property investments are appealing with mortgage rates remaining competitive since 2021.
The Florida real estate market is one of the most profitable investment markets in the USA.
There are many factors suggesting that purchasing Florida investment properties is worthwhile, with a lucrative return on investment.
Why buy a property in Florida USA?
There are plenty of reasons to consider buying property in Florida.
76 million tourists visit the state annually and 400,000 Britons live there.
The warm climate and pace of life are suited to retirement or holiday lets.
Managed properties in Florida are often situated in golf or leisure resorts and can be a good investment because you are allowed to rent them to holidaymakers for part of the year.
The low cost of property in popular tourist destinations such as Orlando, Tampa and Miami make them all affordable destinations and investment areas.
What is the property buying process in Florida USA?
Unless you regularly visit Florida, it is vital to get to know the process first.
Choose an independent and licensed realtor to help you.
It is also important to work with local property companies and research local property and planning laws.
When looking at the cost of owning a property in Florida, you will need to understand the additional expenses that might be involved in the buying process.
Closing costs – payable once you have put down a deposit, these can be high. Budget about 5% of the property value for them.
Real estate tax – assessed annually, the bill typically goes to you or your mortgage. It’s called escrow.
Sales and Use Tax and Tourist Development Tax – both are payable in Florida and the cost of each depends on which county you are in.
Insurance – your mortgage may add your insurance premiums to it. As well as buildings and contents insurance, you may want to consider extra liability insurance if you plan to rent your property out.
US Income Tax – it is important to research US Income Tax and whether you have to pay any in Florida, or if you need to pay tax on the foreign income in the UK.
How long can I stay in Florida if I own a property there?
This is one of the key considerations before moving to Florida.
Legally, you can spend up to six months in any 12-month period in the US on a typical B2 visa.
This works well if you are planning on renting out your Florida property for the other half of the year.
Under the visa waiver programme, you don’t need one at all if you stay for less than 90 days at a time.
If you are looking to stay for longer or planning on moving to Florida permanently, you could invest in a business which would give you permanent residency with certain terms and conditions.
Alternatively, if you are planning to work while moving to Florida, other visa options are available.
How much does it cost to buy a property in Florida USA?
With expenses adding up, it is worth getting a clear idea of what it actually costs for Britons looking to buy property in Florida.
There are plenty of well-priced houses and apartments, called condos and villas.
The price usually depends on location, with factors such as transport links and proximity to water pushing up costs.
There is a multitude of country clubs, shopping malls and exclusive communities throughout Hollywood, Fort Lauderdale and Palm Beach that will ask for high prices.
It is still possible to get good value for money, with some properties near Disneyland Florida selling for under $200,000.
One cost to factor in is that of transferring your international payments to secure a property in Florida.
Consider weak exchange rates and additional fees.
Exchange rates fluctuate and when buying a property abroad this often involves sending a large amount of money overseas.
Do not leave it to chance with the foreign exchange market or risk adding on large transfer fees.
Can a foreigner buy property in Florida?
As the purchase of real estate in Florida is open to foreign nationals, they can invest in real estate in their own name or through a legal entity.
This property investment can include single-family homes, condominiums, townhouses, duplexes, triplexes and other forms of condos.