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Tips For International Buyers Of Real Estate

By Patricia Tan

In recent weeks I have worked with people from several countries who purchased homes here. Their motivations to purchase a property were different, the kind of homes they preferred were diverse, and their budgets varied widely. The buyers also came from different parts of the world, so there were cultural and language considerations when dealing with them too. However, it did strike me that there were many similarities in the questions they asked and the amount of information they required before they felt comfortable making a decision to purchase property here.

We recently made several trips to Canada, where we partnered with one of their leading banks, and made a series of presentations to more than 2,500 bank customers in Quebec and Ontario. While the bank talked about options for Canadians to finance their Florida property purchase, we taught the audience how the real estate market in Florida worked, what they could expect when working to locate the right property, and some of the pitfalls they may encounter along the way. We did a similar series of seminars in England in October, and found many similarities in the questions asked and misconceptions held by members of the audience.

International buyers, just like Americans, invest in property for a variety of reasons. They may be relocating here and buy a primary residence. They may look to purchase a holiday/second home to enjoy for part of the year, escaping winter weather for instance. Some of these purchasers also choose to rent out their properties for short periods when they are not using the homes themselves. The third and growing group of buyers is made up of those simply looking for a return on investment from long term rental properties. Bargain basement prices on real estate, coupled with a healthy demand for rental properties make this kind of investment very attractive to someone who has cash sitting in the bank earning interest at a very low rate.

The first question many foreigners ask is “If I purchase a property in U.S.A., how long may I stay here and enjoy the use of my American home?” It is important for realtors to understand, and convey to their clients, that purchase of property here does not entitle the purchaser to reside here indefinitely, or indeed at all! Questions of this nature are best referred to an experienced immigration attorney as the answer will depend on the individual’s circumstances. Despite popular opinion, and as much as our real estate market may like it if it were true, purchasing a group of rental properties does NOT qualify the purchaser for a green card! Unlike several Central American countries, the U.S.A. does not have a retirement visa, so those looking to spend long periods of time here have to pursue a different immigration strategy, and for that, they need expert advice.

Many international investors ask questions about the tax implications of owning property here. Well, they are many and varied! There are income tax implications if the property is to be rented. Capital gains tax considerations when the home is sold, and possible estate tax issues. It is important to consider these BEFORE a purchase is made, and take appropriate professional advice on how the property should be titled – the buyer’s personal name, a limited company, cross border trust etc. The approach will vary depending upon citizenship, existing tax treaties and the buyer’s personal circumstances. Once again, timely expert advice is needed.

Florida property taxes are also a source of confusion and consternation to overseas buyers. They often think they are penalized and pay more in property taxes than an American citizen. While it may be true that they pay more property tax than a full time resident of Florida, a foreign owner will pay the same property tax as an owner from New York or New Mexico.

Many international buyers come from countries where real estate agents do not have to be licensed and the way in which a consumer searches for property is very different. In their home country, they may be accustomed to working with several real estate agents to be sure that they see all properties that are available in the market. They do not have the benefit of a computerized Multiple Listing System (MLS), and agents can present and show only properties that are listed directly with them. Buyers will often think they have to work directly with the agent who has listed a particular property, and forego the many benefits of working with a single agent who represents them as a buyer.

Working with buyers from a different country can present some challenges to a real estate professional, but international buyers represent a growing segment of our market so it is important that we give them best possible advice and guidance.

Patricia Tan was born in England, and moved to Sarasota in 1997. Her career afforded her the opportunity to live and work in many countries around the world, including Australia, Hong Kong, Singapore, Malaysia, Indonesia, Germany, France, Belgium, Netherlands and the United Kingdom. She spent five years as a Director of an American real estate franchise in England in 1990s. Patricia has served as Chairperson of Sarasota Association of REALTORS®’ International Council, and serves on Florida Association of REALTORS®’ International Operations Committee. She currently works as International Sales Director for Prudential Palms Realty. Patricia may be reached at 941-487-5107 or patriciatan@prudentialpalmsrealty.com.

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