Foreign Buyers of Real Estate

Miami’s location as a hub for international business and investment makes it an obvious choice for many foreign investors who are looking to purchase a second property or who look at international real estate investment as a safe hedge against economic instability in their home countries.  However, given the complexity of U.S. tax laws as they relate to foreign investors, it is crucial that the transaction be structured in the most tax-efficient way possible to reap the maximum benefits and security of the investment.” 

Foreign Real Estate Investor Tax & Estate Planning

U.S real estate can be a great investment for foreign investors and the South Florida market offers great opportunity for foreign buyers to take advantage of the favorable exchange rates between the U.S. dollar and their foreign currency.  However, in our practice, this is one of the areas where we see so much movement, yet so little sound advice from realtors, accountants and real estate lawyers, many of which have very little, if any, knowledge of the tax laws affecting foreign buyers. Realtors aren’t trained to know tax and many real estate lawyers don’t take the time to learn the complicated tax laws surrounding U.S. real estate purchases by foreign buyers.


You didn’t plan to fail.  Don’t fail to plan.

Investment decisions should not be made in a vacuum.  Do not buy real estate without the financial and tax analysis that would allow you to understand and estimate your after-tax return on your investment.

As a foreign investor, you will be exposed to three main types of taxes: income taxes on rental income, capital gain tax upon sale of the property, and the estate tax, if you have the unfortunate luck of dropping dead while still owning the property.   While the first two are inevitable, their effect can be minimized, and the last one can be avoided with proper planning.


Nobody likes to pay more taxes than they have to. Including you.

Lower your income taxes.    Absent proper tax planning, the U.S. may tax foreign buyers leasing their U.S. real estate at a rate of 30% of the gross earnings with no deductions allowed for business expenses.  What’s the point of investing if you’re going to be giving up all your profits to the U.S. government?  We know how to handle the taxes imposed on foreign investors and can help you maximize your return.

Avoid paying the estate tax.  Most U.S. residents never have to worry about this pesky estate tax (unless they are one of the millionaires that are lucky enough to have this problem).   Not so for you foreign investors.  The estate tax hit can cause massive (and avoidable!) financial harm to your heirs. You, as a foreign investor, have two choices:  (1) seek proper guidance, buy U.S. real estate correctly, and become immune from the estate tax or (2) take a gamble, buy it incorrectly, and have your loved ones face an enormous tax hit when you die.  Frankly, in our opinion, it is just financially senseless to fail to plan around something so avoidable.


People get sued.  Protect yourself.  

OK so maybe you’re thinking “I’m not going to rent it” and “I plan on selling it at a profit as soon as the market improves” so I don’t really need tax planning.  Well, unless you are a gambler, you should still talk to us.  We live in a litigious society and, in most cases, it is incredibly dumb for a foreign investor (or even a U.S. investor) to own an investment property in their individual name, when there are perfectly suitable business entities at your disposal.   Just get informed.


It’s your life.  Not everyone needs to know the details.

Anyone can easily look up Florida property records online.  Like…kidnappers, agents of foreign taxing authorities, your friends and neighbors, your ex-wife…need we go on?  What are you exposing to the world at large?  Do you value your privacy?  Some of you don’t care, but we suspect many of you do.


Tailored to fit your goals.

The secret to success is buying the property correctly from the start.  This stuff is complicated – one size does not fit all. There are a multitude of options:  domestic and foreign business entities and trusts, debt arrangements, and various combinations thereof.  Throw in the complication of tax treaties between the United States and certain foreign countries, and this becomes quite confusing to even a sophisticated investor.   We can walk you through it.

You need a customized fit which can only come from a thorough discussion and analysis of the your investment goals and your proposed business activity in the United States, while also taking into account your nationality, the nationality of your heirs, and other privacy and asset protection concerns.


If you’ve taken a misstep, we’ll make things right. 

Let’s face it.  Some of you will see this after you’ve already bought property “incorrectly.”  That’s OK.  We can help you there as well.  We also clean up badly structured real estate investments to achieve more favorable tax results.


Just contact us already. We know what we’re doing. You can reach us by phone at (305) 403-0641, via email at info@msquaredlaw.com.