Generally, foreign national do not incur any additional costs for purchasing and owning property than do U.S. citizens or legal residents. However, a few special rules apply, and you should be aware of their financial impact.
Obtaining a Mortgage Loan
Higher standards are applied to Foreign Nationals who wish to finance their home purchase. You can expect to obtain a loan of between 60 and 75 percent of the purchase price. Also expect additional loan-related costs totaling between 3 and 6 percent of the loan amount.
More favorable loan terms are given if you intend to use the property as a personal residence for you or family members rather than as an investment property leased to tenants.
County Property Taxes
Owners of residential property are required to pay property taxes to the county of record. Counties calculate the annual tax based on Assessed Value, which is recalculated annually. Owners who claim their Florida home as their primary residence may file for a Homestead Exemption, which will reduce the amount of property taxes owed. The more expensive the property, however, the less impact a Homestead Exemption will have on the tax reduction.
Florida residents eligible to receive a Homestead Exemption on their primary residence also receive a benefit from the ‘Save Our Homes’ Act. ‘Save Our Homes’ restricts the increase of Assessed Value to no more than 3% annually or the Consumer Price Index, whichever is less.
Foreign Investment in Real Property Tax Act of 1980
This federal law — commonly referred to as ‘FIRPTA’ — affects residents of Canada, Europe, and other foreign countries who own property anywhere in the United States. The law stipulates that whenever you sell, exchange, gift or transfer U.S. property, you may be subject to U.S. income tax. Because of this, 10% of the realized sale amount must be withheld by the buyer on your behalf and held in an escrow account. For additional information, contact a tax accountant or attorney.
Homeowners’ Association Assessments
Most homes built within the last 20 years or so belong to Homeowners’ Associations (HOA). Usually the HOA requires all residents to belong to the HOA and to be subject to its rules, regulations, covenants, deed restrictions, and assessments. HOA assessments cover expenses incurred for the upkeep of common grounds, which may include lawn and shrub care, pool maintenance, road repairs, and other costs associated with maintaining the subdivision and preserving property values.
Maintenance Fees
If you purchase a condominium or townhouse, you will usually be required to pay a monthly fee for maintenance. Maintenance costs cover such items as roof repair, lawn maintenance, or exterior painting. This fee is in addition to the HOA fee.
