Advice for Foreign Home Buyers
With revived interest in purchasing second homes in Florida from buyers across the pond, we asked Bryan Guentner, broker-owner at Re/Max Platinum Realty, to share tips for foreigners to help make the home-buying process easier.
How an international buyer takes title of the home depends on the treaty between the buyer’s country and the United States, says Guentner, so it’s vital to consult a CPA or other qualified tax professional who specializes in international clients. Ask your CPA also about a trust, a business entity such as an LLC, or other legal form of ownership to assist you with potential tax savings.
It’s important for foreign buyers to get advice about visas from a qualified professional such as an immigration attorney. “A lot depends on the buyer’s end goal,” Guentner says. “If they plan to live in the United States, they can’t live here with a tourist visa or risk having that visa revoked; they need to apply for a more permanent visa. To be eligible for an immigrant visa, they must be sponsored by a U.S. citizen relative, permanent resident or prospective employer.”
If they are buying property here for investment purposes only, there are a number of visas that may be appropriate. To qualify as an immigrant investor, they must invest at least $1 million (or $500,000 in a high-unemployment or rural area). These investments must create full-time jobs within two years for at least 10 people.More information is available on the Bureau of Consular Affairs website, travel.state.gov.
Foreign buyers must also consider money transfers from country to country, as the currency exchange can fluctuate on a daily basis. A 5 percent fluctuation in currency can make a huge difference in the buying price. Companies such as Money Corp. will allow buyers to lock in the rates for six months if they put down 10 percent, Guentner advises.
Later, says Guentner, when a foreign homeowner wishes to sell his U.S. property, there is an additional step to take if the seller does not participate in the U.S. tax system and the property price exceeds $300,000. When preparing for settlement, one of the concerns of every settlement company is whether the seller is affected by the Foreign Investment Real Property Tax Act (FIRPTA). All settlement companies will require the seller to sign an affidavit stating they are not subject to FIRPTA. If the seller cannot or will not sign the affidavit, then10 percent of the sale price is collected at settlement and paid directly to the IRS by the settlement company. The foreign seller will need to contact a CPA or accountant and ask about applying for an exemption by filling an IRS Form 8288, on or before the date of settlement.