In 2012, according to the Florida Association of Realtors’
2012 Profile of International Buyers, almost 20 percent of the total dollar
volume of home sales was to non-resident foreigners. To take that one step further, Miami real
estate is a top pick in Florida for international home buyers with most buying
homes for investments, vacation homes and temporary housing for those working
or going to school in the United States.
With over 31 percent of international buyers investing in Florida real
estate buying in Miami, it is important to be aware of the following
considerations when buying Florida, and more specifically Miami real estate.
Openness. The US differs from other countries in terms
of the openness of the real estate market.
When a house goes on the market for sale, it is placed on the Multiple
Listing Service so that every licensed agent has access to the opportunity of
selling it to a client. Even though the
home has a sign in the front yard with the listing agent and company’s contact
information, potential buyers choose their own agent to represent them which is in contrast to other countries where
the listing agent is the only one who deals with a specific property. Sellers pay the commission for the entire
transaction and split the payment between both sides in an agreed upon manner.
Financing. After the economic crash a few years ago,
financing home purchases by international buyers was very nearly
impossible. Primarily, because other
countries do not have the same credit rating system, many banks were (some
still are) reluctant to make loans to non-resident foreign buyers. Because of this, most transactions are cash
to the tune of 82 percent (FAR, Profile of International Buyers). Over the past year or so, banks are loosening
their reins and are more willing and able to offer financing to international
buyers with several requirements such as maintaining reserves to cover mortgage
payments for a period of time and a hefty down payment of 30 to 40 percent.
Taxes. Many international buyers are not familiar
with the taxes that are incurred from buying real estate in the United
States. But because they are not
American citizens, the rules are more complex. There are different rules with different taxes
such as capital gains, tax on net income from investment property, estate tax
and others. The best thing is to seek
advice and guidance from a tax attorney in the buyer’s home country to ensure
they follow the proper procedures.
Intended Use. Because the time non-resident foreigners can
spend in the US varies depending on the reason for their stay, many
international buyers should determine the intended use of their Florida
property. For example, unless they have
a visa for work or school, foreigners are limited to six month stays in the
US. Because of this, many buyers use their
Miami real estate as rental or investment property. When working with an agent, it is important
to consult with attorneys to have a complete understanding the ins and outs of
owning Miami real estate.
Buying Miami real estate is a solid investment that comes
with a lot of details. We recommend that
international buyers do their homework to ensure a smooth transaction and
fruitful investment.
