One of highly-acclaimed restaurateur Ashley Christensen’s restaurants in Raleigh, North Carolina, is aptly named after the two unavoidable occurrences in our lives: “Death and Taxes”.
With that charming thought in mind, before buying or selling any US property please consult a recommended and experienced tax advisor, independent if you are a US citizen or a Non-resident.
Among other subjects, this consultation should clarify under which name (e.g.: company, land trust, your heirs) you will take title to the property. Inheritance tax in case of the death of an owner or co-owner will be directly influenced by this and can be substantial.
Additional issues that should be discussed in a consultation are taxable income from investment properties, FIRPTA, tax treaties with such countries as Austria, Germany, Luxembourg or Switzerland to avoid double taxation, and what duration of stay per year may trigger US taxation: permanent residents, green card holders and US citizens are taxed on their worldwide income regardless where they reside. In such case, expatriation, certain exception of US citizens residing in Puerto Rico and the US Virgin Islands or giving up the Green Card are likely the only options to circumvent worldwide taxation.
Lastly, the State of Florida doesn’t levy a state income tax. Instead, counties and communities finance themselves mostly through real estate or property taxes. They are based on a percentage of the market value and paid annually. Every property owner – residential, commercial, industrial or land owner – has to pay them. Non-payment can result in loss of the property, so property taxes are not to be handled casually.
Important to know: a change in ownership triggers a new property assessment which results a tax increase, unless the purchase price is lower then the previous purchase price. Beware of relying on the tax amount the current owner pays – a new owner will nearly always see an increase, which can often be estimated with online tax calculators for the county the property is located in. Ask your Realtor or real estate broker for further guidance.
"Insider Guide to Florida Real Estate Transactions, ch. 10: Taxes" by Tobias Kaiser, CC BY-NC-ND
Tobias Kaiser works as an independent real estate broker and consultant in Florida since 1990. Always putting his clients' interest first, he specialises in modern Florida homes and architecture, as well as net leased investments.