Accountant for Foreign Nationals that Own Real Estate in Florida
The tax laws in the United States can be more than a little convoluted, not only for American citizens but also for those who own property or do business here. One of the groups affected by U.S. tax laws is foreign nationals who own property in Florida, a sunny state with premium real estate and a broad appeal to people around the world. A number of factors can impact the amount you might ultimately be required to pay if you own real estate in Florida, but most the most dominant of these are your residency status and the way the property is used.
The skilled accountants at U.S. Tax Help can limit your tax burden and ensure compliance with all tax laws, potentially saving you thousands. No matter where in the world you live or what property you own, the international tax specialists at U.S. Tax Help stand ready to put their experience and knowledge to work for you today. To set up your first consultation, visit us online or call (541) 362-9127.
Florida Residency by Foreign Nationals Who Own Real Estate
One of the two main criteria that determine a foreign citizen’s tax obligation to the U.S. government is their residency status in the eyes of the Internal Revenue Service, better known as the IRS. Generally, nonresident aliens are only taxed on income earned in the U.S. or the value of the property they own, which is often a relatively minor portion of their income, especially if they live in another country. However, those deemed residents under American law may suddenly find themselves owing a portion of all their worldwide income to the IRS – a significantly greater tax burden than that faced by non-residents.
The IRS uses two specific tests to judge whether a person qualifies as a U.S. resident. One of these tests is simple, and the other is somewhat more complicated:
- The green card test is simply a measure of whether or not you have been issued an alien registration card, also called a “green card,” by the U.S. Citizenship and Immigration Services. If so, you are considered a lawful permanent resident under the law and must pay the appropriate income tax.
- The substantial presence test considers the amount of time during which you have been physically present in the U.S. over the course of this year and the last two years. You meet the standards of this test and are considered a U.S. resident if you were in the United States for at least 31 days this year, as well as a total of 183 days over the three-year period; the 183-day benchmark includes all days you were present during this year, 1/3 of the days you were present last year, and 1/6 of the days during the year before that.
Any foreign national who passes either of these tests will be taxed by a higher rate, so keep these thresholds in mind if you maintain a residence in the Sunshine State.
Owning Rental Properties in Florida as a Foreign Citizen
Though there are still tax considerations at play for foreign nationals who own rental properties in Florida, they tend to be more straightforward than other obligations to the IRS. This is because the government applies different types of income tax for different sources of income: Money earned in the U.S. through a trade or business is taxed in a similar way to income earned by U.S. citizens and residents, whereas income that takes the form of fixed, periodic payments (such as those made by a tenant to the owner of the property they rent) are taxed at a flat rate of 30%.
However, under certain circumstances a foreign national who owns a rental property can choose to count that property as being connected to a trade or business, rather than subject it to the standard 30% tax rate. This will allow you to deduct certain expenses from your tax obligation, which could possibly save you money, though it also requires additional paperwork and the implementation of a more complicated graduated tax rate. A skilled accountant can take a look at your finances and guide you on the best course for your situation.
Other Taxes on Foreign Nationals Who Own Real Estate in Florida
Depending on the country you hail from, your taxes may be affected by a treaty between your home country and the United States. In addition, the sale of any U.S. property by a foreign citizen is subject to the Foreign Investment in Real Property Tax Act, or FIRPTA, which has a set rate of withholding that will certainly play a part in the sale. If you are unsure about the exact circumstances surrounding your tax obligations to the U.S. or the existence of any tax treaties, contact a knowledgeable tax professional who specializes in international transactions and tax planning.
International Tax Specialists Serving Clients Around the World
For foreign nationals looking to buy, sell, or manage real estate in Florida, there is no better resource than the team at U.S. Tax Help. Led by Ted Kleinman, a CPA with more than 30 years’ experience with international tax preparation and planning, this group of professionals has the knowledge and insight to guide you through the treacherous waters of American tax law. Set up your first consultation with Ted and his team by visiting the U.S. Tax Help website or by calling (541) 362-9127 today.