Tips for Foreign Buyers
How to Buy Property in Florida for Foreign Nationals
The US is the most popular country for all European and particularly British people buying second homes abroad, and the bug majority of them buy in Florida.
Since Florida property prices are coming back, for people buying now it could be the perfect time for an investment.
- Consider the reasons for buying property in Florida. Attractions include the climate, favorable exchange rates and the availability of flights (and bargain fares) from all major UK and European airports. Few purchasers appear to be put off by travel time – a minimum of eight hours from London, depending on whereabouts in the state you are flying to. As the US economy is recovering and many developers in Florida are facing tough market conditions in which to promote their projects, with professional representation of Bauer International Group all International buyers are able to get great discounts on new and re-sale properties. The exchange rate between the US Dollar and Sterling means Brits are getting far more property for their Pounds.
- Consider popular locations in Florida. This guide gives a flavor of the areas of Florida most popular with British second home purchasers –the resorts on the southwest (Gulf) coast,the central region around Orlando and the east (Atlantic) coast.
- The Gulf Coast – Its magnificent white beaches, azure seas, plentiful moorings and fine restaurants – attributes that have made it popular with the super-rich. Around 60 per cent of the US’s wealthiest citizens winter at Naples, an exclusive resort on the Gulf Coast. Consequently, the Gulf Coast is not an inexpensive area but with the right help of professional realtor from Bauer International Group in Naples you can find great buys that will become an outstanding investment here. Houses on the waterfront, in particular, command prices easily in excess of twice those of similar-sized ones in the Orlando area. Properties further inland or up the coast are slightly less expensive. Unlike some other parts of Florida, it is warm all year round.
- Central Florida – The central part of the state, particularly around Tampa and Orlando, has long been a favorite with British holidaymakers, especially families, as it is there that most of the big attractions are located, including Disney World, Universal Studios, Busch Gardens and Sea World. Its popularity, and the resulting healthy rental market, which offers owners the best returns in Florida, makes the area a magnet for investors. Prices reflect this, but generally still represent good value as the volume of new construction helps keep them competitive. Most purchasers here are looking for detached villas with pools.
- The Atlantic Coast – Florida’s Atlantic Coast stretches from St Augustine through Daytona Beach, Fort Lauderdale and Miami, right down through the Florida Keys to Key West. It includes some of North America’s most desirable (and expensive) locations, such as Palm Beach, where prices routinely run to millions of dollars. However, not everywhere on the Atlantic Coast is this pricey, and if you choose your location carefully, you can find a three-bedroom house with a pool for around $250,000 (approximately £125,000).An apartment in a good area of Miami will start from around $300,000 (about £150,000) – not bad considering how much the city offers: beautiful beaches, blue seas, non-stop nightlife, a varied art and culture scene, fascinating Art Deco architecture and a consistently warm climate. Many current buyers are taking advantage of the stressful situation of developers involved in Miami condo projects to get some of the best discounts available in international real estate.
- Buy a property in Florida. The Floridian system of property purchase is quite different from the UK’s and has several pitfalls for those unfamiliar with it, so appropriate professional guidance is essential.In Florida, nearly every property for sale is listed on a central database available to all estate agents (known as realtors in the US). It is wise to consult a Realtor you can trust that is experienced in working with British purchasers. Bauer International Group specializes in representing European buyers and negotiating the best terms possible in every transaction on their behalf. Please contact Vito Bauer – Florida Fine Homes Specialist at 239.777.7080 for your private and confidential consultation that is always free for buyers.
- Cover the costs. To cover legal, title insurer and notary fees, title insurance premiums, transfer taxes, property taxes and mortgage fees (if applicable), you should allow around five per cent of the purchase price.
- Understand the purchase process. Once a price is agreed, the purchaser pays a small goodwill deposit before making a formal offer in the form of a purchase contract. When signed, this is binding, though contingency clauses allow either side to withdraw in defined circumstances. A 10 per cent deposit is then paid into an escrow account. A title insurance company scrutinizes the public records and insures the property against any third party claims. Completion, including the transfer of the balance of the purchase price into the escrow account, can then take place.
- Time is a crucial element of the US home-buying system. If you fail to observe dates stipulated in the contract, you risk losing your deposit.
- Obtain a mortgage. When working out how to finance your property purchase, consider all the options. Paying cash, if you can afford to, is often recommended, but you may not want to tie up a relatively large sum in this way. If this is an option for you, be sure to consult one of the specialist currency exchange companies in the market, as you can get far better exchange rates and potentially save thousands in the process. The other options are remortgaging your UK home or arranging a mortgage on your Florida property through a UK or US lender. Remortgaging offers the easiest solution. Releasing equity in a UK home means that the second home can be purchased for cash, without the need for another mortgage. However, this may only be feasible for those who own their first home outright.Several UK mortgage providers will lend funds of up to 80 per cent of the purchase price for second home purchase over, typically, a 15-year term.
- Get a mortgage in Florida. If you decide to obtain finance in the US, bear in mind that most mortgages available to foreign nationals require a minimum 30 per cent down payment. At the beginning of the process, make sure you obtain what is known as a Good Faith Estimate. This is a standardized document used to detail all the costs of obtaining your mortgage, including both monthly and one-off payments.If possible, try to secure a self-certified mortgage. Unlike in the UK, this kind of mortgage does not necessarily carry a higher interest rate than a fully documented mortgage, and it could save you a lot of time and trouble spent assembling documents.
- Understand the taxation system. The US taxation system is a complex one, and may involve payments to at least four different levels of government: local, regional, state and federal. A Double Taxation Treaty between the US and the UK prevents double payment of taxes.Income tax, a progressive tax ranging from zero to 35 per cent of taxable income, forms the bulk of taxes collected by the US government.
- Florida ranks lower than most other US states in terms of the tax burden it imposes. It is one of only nine states that do not levy a personal income tax. More than half of its non-federal revenue is collected at local level, mostly through property taxes, which, for homeowners, amount to approximately 1.5 per cent of their property’s value per annum.
- All rental income in Florida is subject to tax, which is charged on a sliding scale (currently 15 to 34 per cent), depending on the amount. ‘Intangible personal property’ (that is, stocks, bonds, mutual funds and so on) is also taxed.
- Florida’s sales and use taxes provide over half of state revenue. Sales tax applies to most retail items (excluding groceries, medicines and certain other items), as well as to car and hotel room rentals and theater tickets. The rate is currently 6 per cent. Local governments may levy an additional local sales tax of up to 1.5 per cent. The use tax is levied on wholesale items brought into Florida for sale.
- Get the right passports, visas and residency sorted.Passports and visas – British citizens may visit the US for business or pleasure without a visa for up to 90 days per year. A passport is required. The traditional Visa Waiver program in operation for most European nationals allowing them to stay in the US for up to 90 days was changed in January 2009. From this point, all travelers wishing to use the Visa Waiver will be required to register themselves online before departure for the US. This should preferably be done at least 72 hours in advance, and is intended to afford an extra layer of security for the US authorities. The online registration will be valid for up to two years; will be named the Electronic System for Travel Authorization; and will be similar to Australia’s Electronic Travel Authority in operation. The ESTA is also valid for multiple entries into the US, so for property owners it is possible to fill out the online registration once and then travel for two years under the normal Visa Waiver Program.
Those wishing to stay between 90 days and six months must hold a B2 visa. To be successful, applicants must prove they have sufficient funds to support themselves during their stay.
- Residency; Florida’s immigration laws are strictly enforced. Those seeking a Florida Green Card, which entitles them to live and work in the state, face close scrutiny by the Immigration and Naturalization Service, particularly if they wish to start a business.
- Those not planning to work, including retirees must be able to demonstrate substantial means.