Taxes for Foreign Property Buyers in Florida (FIRPTA

Property Taxes in Florida for Foreign Owners

Florida property taxes are assessed annually by the county property appraiser based on the fair market value of the property. In Miami-Dade County, effective property tax rates typically range from 1.8% to 2.2% of the assessed value, depending on the municipality and applicable millage rates. Buyers working with our advisors receive structured guidance through buyer representation in Miami.

Foreign owners pay the same property tax rates as U.S. citizens. However, one important distinction applies: non-resident owners generally do not qualify for the Florida homestead exemption, which provides both a tax reduction and a 3% annual cap on assessed value increases for primary residences. Without the homestead exemption, non-homesteaded properties are assessed at full market value and may experience larger annual tax increases. The Miami-Dade County Property Appraiser publishes assessed values and millage rates for all properties in the county.

For a complete overview of the international buying process including financing and legal structure, our guide on buying property in Miami as an international buyer provides comprehensive coverage.

Rental Income Taxation for Foreign Owners

If your Miami property generates rental income, that income is subject to U.S. federal income tax. Foreign owners have two options for how this income is taxed:

• Gross Income Method (default): A flat 30% withholding is applied to gross rental income with no deductions allowed. This method is simple but often results in a higher tax burden.
• Net Income Election: By filing a U.S. tax return and making the net income election under Section 871(d), foreign owners can deduct expenses including mortgage interest, property taxes, insurance, management fees, repairs, and depreciation. The remaining net income is taxed at graduated rates, which typically produces a significantly lower tax liability.

Most tax advisors recommend the net income election for foreign property owners with any meaningful level of deductible expenses. Once made, this election applies to all subsequent tax years unless revoked with IRS approval.

FIRPTA: What International Buyers Need to Know Now

The Foreign Investment in Real Property Tax Act (FIRPTA) is a federal law that requires the buyer to withhold 15% of the gross sale price when purchasing from a foreign seller. While FIRPTA primarily affects sellers, buyers should understand it from the outset because it will apply when they eventually sell the property.

Key FIRPTA provisions include: the standard withholding rate is 15% of the gross sale price; a reduced rate of 10% applies if the property is sold for $1 million or less and the buyer intends to use it as a primary residence; sellers can apply for a withholding certificate (IRS Form 8288-B) to reduce the withholding based on anticipated gain; and if the withholding exceeds the actual tax liability, the seller files a tax return to claim a refund. Buyers who are still exploring whether foreign nationals can legally purchase real estate should review our guide on whether foreigners can buy property in Miami for a full legal overview. Understanding available financing options is equally important, as mortgage interest deductions can offset rental income tax liability.

Understanding FIRPTA at the time of purchase allows for proactive tax planning. Maintaining detailed records of your purchase price, improvement costs, and capital expenditures throughout ownership will simplify the tax calculation when you eventually sell.

U.S. Estate Tax for Foreign Property Owners

Foreign nationals who own U.S. real property are subject to U.S. estate tax on the value of that property at death. The estate tax exemption for non-resident, non-citizen individuals is currently $60,000 — dramatically lower than the approximately $13 million exemption available to U.S. citizens and residents. Estate tax rates on amounts exceeding the exemption range from 18% to 40%.

This is one of the primary reasons international buyers commonly hold Miami real estate through LLCs, foreign corporations, or trusts rather than in their individual names. Proper entity structuring can significantly reduce or eliminate U.S. estate tax exposure, though each structure has its own tax implications that must be carefully evaluated.

Tax treaties between the U.S. and certain countries — including Canada, the United Kingdom, Germany, and others — may provide additional estate tax relief. The treaty provisions vary significantly, making professional tax advice essential for international property owners. For investors evaluating where to deploy capital, our guide on the best areas in Miami for international investment provides neighborhood-level analysis of yields and appreciation. Monitoring the Miami real estate market helps inform timing and structuring decisions. Supreme Capital Real Estate coordinates with international tax advisors so clients can review ownership structure before purchase.

Capital Gains Tax on Future Sale

When a foreign owner sells U.S. real property, the gain is subject to U.S. capital gains tax. For properties held more than one year, long-term capital gains rates of 0%, 15%, or 20% apply depending on the amount of the gain. Properties held for one year or less are taxed at ordinary income rates.

The capital gain is calculated as the sale price minus the adjusted cost basis (original purchase price plus capital improvements minus depreciation taken). Proper record-keeping throughout ownership is critical for minimizing the tax liability at the time of sale. The 15% FIRPTA withholding serves as a prepayment toward this capital gains tax obligation.