Tax Advisory Services
What are the property taxes?
The Property Tax is a wealth tax on the land and real estate. Given that the State of Florida, its districts and counties do not collect taxes on income, are required to obtain income in another way. Taxes are collected primarily by the cities.
Depending on the linkage of the land, in the Miami-Dade county may be estate taxes between 1.75% and 2.00% annually. Many thousands of tax can be raised for a limited time by the tax authorities, individual investments special (Special Assessments); as a basis for the calculation of the tax is used, the estimated value (Assessed value) of the property, which is established by the assessor of taxes of the county town (County of City Tax Appraiser).
The estate tax is levied once a year, regardless of the status of residence of the owner.
When and who pays this tax?
Generally, the payment of this tax can be performed from the first of November until the 30th of march. Counties offer discounts for those who pay in November and already considered a late payment on the first day of April.
Payments are made directly to the county in which the property is located and most allow you to do it online, which is great for those who find themselves outside the country.
Tax to the foreign investment in real estate (firpta)
What is FIRPTA?
Is the acronym in English of the Tax Law on Foreign Investment in Real Estate in 1980 (Foreign Investment in Real Property Tax Act.)
Who is affected by the FIRPTA?
FIRPTA affects any individual non-resident foreigner and foreign companies are not considered as domestic corporations. From the point of view of taxation (income tax return) when a person is not a resident or a corporation, or a foreign company sells a property within the united states, shall be subject to the provisions of FIRPTA.
How does it affect you?
At the time of notarization (closing) the seller will perform a withholding tax of 10% on the sale price, in transactions under $1,000,000, and 15% if the sale price is above $1,000,000. For example, a “foreign investor” sold the property for US$350,000 agent closing of the transaction (company or attorney who is prosecuting the title) will retain US$35,000 in a special account called an “escrow” (escrow account) until the “foreign investor” to present its statement of income taxes in January of the following calendar year, l close of the sale.
What is the difference between Withholding and Tax?
Retention is the mechanism by which the state Treasury (IRS) “forcing” the individual or foreign company to submit their statement to determine if there is any profit or loss in the transaction.
Once you make the declaration and the IRS determines the amount to be charged as tax, the differential between the retention and the tax is returned to the seller.
How can you avoid this withholding?
It is very important to give attention and proper planning at this point, so that there are no negative surprises at the closing time.
Buy a personal name or in the name of a company is one of the most important elements in the application of Firpta. However, not only is the type of legal structure if not the internal constitution which could make the difference. On the other hand, Firpta is only one of the factors to take into account, therefore, it is extremely important to understand the advantages and disadvantages of the different structures of purchase (LLC, S-Corp, Trust, Inc, etc)
How does it affect buyers?
As the buyer should make sure that you perform the retention in case the seller is a “foreign individual non-resident or foreign company are not considered national corporation” otherwise you could be liable to pay such withholding.
How can I recover the amount withheld?
In this case, you should hire a lawyer, real estate or a chartered accountant that you can fill out the proper requests, and obtain the individual Taxpyer Identification Number (ITIN). The ITIN is a number assigned by the IRS to individuals who do not possess a social security number to see if the seller receives a portion of the retention because the tax liability real is not known at the time of closing.
Then you send those requests, and returns to the Internal revenue Service (IRS) the application process can last up to 90 days.
LEGAL NOTE: The provisions of FIRPTA are complicated and require the expertise of a lawyer, real estate or certified public accountant that you can fill out the proper requests, and assess the potential implications. At no time should you take this information as advice.