The quality lifestyle, fantastic weather, location and incredible beauty of Miami has always attracted buyers and investors from across the globe. We are diverse city and no longer simply a city built on tourism. Real estate in Miami is an export industry and a major component of our local economy.
U.S. Real Property Practices
In the U.S., real estate commissions are paid by the seller, and in most residential transactions, there will be an estate agent representing the seller and another agent representing the buyer. In most municipalities, real estate records, lien and mortgage information is completely transparent and available via online public records.
There are many reasons to invest in real estate, however, the two most important factors should be for currency and portfolio diversification benefits and to act as a hedge against inflation. Several studies have proven that global diversification in investment properties results in both decreased volatility and increased return on investment of your portfolio.
As the owner of a condominium, you are much like a shareholder in a corporation. Condominiums are governed by a set of bylaws, rules and regulations, and the declaration of condominium. You should learn about the governance of the condo and pay particular attention to the application process, interview requirements, rules and regulations, financial statements, and occupancy restrictions.
Unlike many other countries, the purchase price of a residential property includes all of the appliances, light fixtures, window treatments etc., unless specifically excluded in the purchase and sale contract. This section covers the initial and general cost components of owning or renting property, including closing costs, taxes, insurance, agency commissions etc.
U.S. Investment Visas
Historically, and especially over the past few years, Miami has been the recipient of waves of immigrants from the Americas and Europe whether permanently or on a temporary basis via an investment visa. The two most common options that most of our clients qualify under are either the EB-5 Immigrant Investor visa or the E-2 Treaty Investor visa.
Mortgage Financing for Foreign Nationals
Most of the large U.S. banks and local Miami banks offer purchase mortgages and refinance mortgages to foreign nationals. Each bank, or mortgage lender, will offer different types of loan products, maximum loan limits, underwriting criteria, reserve requirements etc. This section will familiarize you with the process and general guidelines.
Tax Related Matters
The sale or transfer of U.S. real property by a foreign national is subject to a 15 percent withholding tax of the purchase price at the time of closing, known as the Foreign Investors Real Property Tax Act (FIRPTA). Although it is not an added tax to foreign nationals, there are exemptions and structures that one can employ at the time of purchase to avoid FIRPTA later.
Post Closing Considerations
Prior to closing and completing your real estate transaction, we suggest that you start to plan and take the necessary steps to manage the ownership and enjoyment of your new Miami property. These steps include payment of the monthly condo maintenance fees (service charges), property insurance, real estate taxes, property renovations, property management etc.
Common Mistakes Foreign Buyers Make
Although foreign buyers are afforded the same rights and privileges as that of U.S. citizens and residents, there are a few mistakes that they commonly make. These typically include dealing with FIRPTA, U.S. estate taxes, property insurance, rental income and determining if you meet the IRS substantial presence test in any given calendar year.