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2016 Florida Homestead Exemption Reminder

It’s not too early to file for a property tax exemption for next year; filing now
will allow Florida property owners to beat the rush that normally occurs early in the year
as people try to beat the March 1 deadline.

Any Florida property owner with legal title to a home and who uses it as his or
her permanent, primary residence by Jan. 1 is eligible for this exemption. Homeowners
making their first claim at this time should contact their respective county property
appraiser’s office to find out how best to file for the exemption — many offices
offer applications online or will mail applications to residents. Homeowners may
also file for a homestead exemption in person, bringing along the deed to their
property or a property tax bill — something to prove they own the home. Most property
appraisers’ offices will accept applications for homestead exemption until the March
1 deadline. Please call your local county property appraiser’s office to find out
more.Visit the link found on my web site for contact information.

https://www.optimaproperties.com/south-florida-resources

Here are the criteria to see if you qualify and the documentation you will need
to provide along with your application:

$25,000 Homestead Exemption

Every person who has legal or equitable title to real property in the State of Florida
and who resides thereon and in good faith makes it his or her permanent home is
eligible to file for Homestead Exemption. First time applicants are required to
furnish their social security number, and should have available evidence of ownership(
i.e., deed, contract, etc. ) If title is held by the husband alone, a wife may
file for him, with his consent, and vice versa. If filing for the first time, be
prepared to answer these and other questions:

1. In whose name or names was the title to the dwelling recorded as of January 1st?
2. What is the street address of the property?
3. Are you a legal resident of the State of Florida? (A Certificate of Domicile
or Voter’s Registration will be proof if dated prior to January 1st.)
4. Do you have a Florida license plate on your car and a Florida driver’s license?
5. Were you living in the dwelling which is being claimed for homestead exemption
on January 1st?

Additional $25,000 Homestead Exemption for persons 65 and older

Every person who is eligible for the homestead exemption described above is eligible
for an additional homestead exemption up to $25,000 under the following circumstances:
(1) the county or municipality adopts an ordinance that allows the additional homestead
exemption which applies only to the taxes levied by the unit of government granting
the exemption; (2) the taxpayer is 65 years of age or older on January 1 of the
year for which the exemption is claimed; (3) the annual household income of the
taxpayer (defined as the adjusted gross income as defined in s. 62, United States
Internal Revenue Code of all members of a household) for the prior year does not
exceed $20,000 (beginning January 1, 2001, this income threshold is adjusted annually
by the percentage change in the average cost-of-living index); and, (4) the taxpayer
annually submits a sworn statement of household income to the property appraiser
not later than March 1.

$500 Widow’s Exemption

Any widow who is a permanent Florida resident may claim this exemption. If the widow
remarries, she is no longer eligible. If the husband and wife were divorced before
his death, the woman is not considered a widow. You may be asked to produce a death
certificate when filing for the first time.

$500 Widower’s Exemption

Any widower who is a permanent Florida resident may claim this exemption. If the
widower remarries he is no longer eligible. If the husband and wife were divorced
before her death, the man is not considered a widower. You may be asked to produce
a death certificate when filing for the first time.

$500 Disability Exemption

Every Florida resident who is totally and permanently disabled qualifies for this
exemption. If filing for the first time, please present at least one of the following
as proof of your disability: A certificate from a licensed Florida physician or
a certificate from the United States Department of Veterans Affairs.

$5000 Disability Veteran

Any ex-service member disabled at least 10% in war or by service-connected misfortune
is entitled to a $5000 exemption. If filing for the first time, please present a
certificate from the United States Government.

$500 Exemption for blind persons

Every Florida resident who is blind qualifies for this exemption. If claiming exemption
based on blindness, a certificate from the Division of Blind Services of the Department
of Education or the United States Department of Veterans Affairs or the Federal
Social Security Administration certifying the applicant to be blind is required.
“Blind person” is defined as an individual having central vision acuity 20/200
or less in the better eye with correcting glasses, or a disqualifying field defect
in which the peripheral field has contracted to such an extent that the widest diameter
or visual field subtends an angular distance no greater than twenty degrees.

Service-connected total and permanent disability exemption

Any honorably discharged veteran with a service-connected total and permanent disability,
surviving spouses of qualifying veterans and spouses of Florida resident veterans
who died from service-connected causes while on active duty as a member of the United
States Armed forces are entitled to an exemption on real estate used and owned as
a homestead less any portion thereof used for commercial purposes.

Persons entitled to this exemption must have been a permanent resident of this state
as of January 1st of the year of assessment.

Under certain circumstances the benefit of this exemption can carry over to the
veteran’s spouse in the event of the veteran’s death. Consult your appraiser for
details.

If filing for the first time, please bring a certificate from the United States
Government or United States Department of Veterans Affairs as your proof of a service-connected
disability or death of your spouse while on active duty.

Exemption for totally and permanently disabled persons

1. Any real estate used and owned as a homestead, less any portion thereof used
for commercial purposes by any quadriplegic shall be exempt from taxation.
2. Any real estate used and owned as a homestead, less any portion thereof used
for commercial purposes, by a paraplegic, hemiplegic or other totally and permanently
disabled person, as defined in Section 196.012(10), F.S., who must use a wheelchair
for mobility or who is legally blind, shall be exempt from taxation.

Persons entitled to the exemption under number two (2) above, must be a permanent
resident of the State of Florida as of January 1st of the year of assessment. Also,
the prior year gross income of all persons residing in or upon the homestead shall
not exceed the amount of income, set forth in section 196.101(4), F.S., adjusted
annually by the percentage change of the average cost of living index issued by
the United States Department of Labor. Gross income shall include United States
Department of Veterans Affairs benefits and any social security benefits paid to
the person. A statement of gross income must accompany the application.

If filing for the first time, please bring a certificate from two (2) licensed doctors
of this state or a certificate (per s. 196.091, F.S.) from the United States Department
of Veterans Affairs.

_____________________________

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Homebuyer Advice, Kim Around the Web, Real Estate, Real Estate Closings, real estate news, Real estate trends by Kim Bregman
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2016 Real Estate Forecast

Forecasts for the 2016 housing market are starting to trickle in; analysts are predicting that next year’s market will be a picture of “moderate, but solid growth.”

Several real estate pundits are predicting about a 3% year over year growth in housing prices with price increases being dampened by predictions of mortgage rates increasing to 4.65% for a 30-year fixed by the end of 2016.

Total sales of existing and new homes will reach 6 million for the first time since 2006; new home starts will increase 12 percent and new home sales will grow 16 percent, but it will take continued growth in both the gross domestic product and the job market to get there.

The U.S. economy in 2016 is expected to power forward at a steady, reasonable pace. Surveys of lenders continue to show that credit is becoming more available for homeowners, aided by new jobs for millions more people now working.

Lawrence Yun, chief economist for the National Association of REALTORS® expects a moderate annual increase in sales of existing homes of around 7.3 percent in 2015, rising 2.9 percent in 2016. Even brighter is the outlook for new-homes sales, projected in 2015 to grow at 14.9 percent over 2014 levels, and 16.7 percent in 2016.

2015 may have marked the best year for housing since 2007, but the market will likely get even rosier in 2016, according to a recent real estate forecast by Realtor.com®. One of the main drivers behind the brighter 2016 is the projection that employment will continue to grow, which will add to consumers’ wallets and allow them to purchase their first home or upgrade to a new one.

Realtor.com® highlights the following housing predictions for 2016:

1. ‘Normal’ is coming.

Expect a healthy growth in home sales and prices – at a slower pace than in 2015. “This slowdown is not an indication of a problem-it’s just a return to normalcy,” writes Jonathan Smoke,Realtor.com’s® chief economist. New construction and distressed sales are expected to return to more historical levels, and home prices are expected to follow at “more normal rates consistent with a more balanced market.”

2. Generational buying trends shape up.

Young adults’ presence on the housing market has been largely predicted for years, but 2016 may finally be the year they make a move in a larger way. Millennials represented nearly 2 billion sales in 2015 – one-third of home-buyers. They are expected to continue to be a major buying pool in 2016 with the majority of buyers between ages 25 and 34 expected to be first-time home buyers next year.

But two other generations will also have a big presence in 2016: financially recovering GenXers and older baby boomers who are entering retirement, Realtor.com® notes. “Since most of these people are already homeowners, they’ll play a double role, boosting the market as both sellers and buyers,” Smoke notes. “Gen Xers are in their prime earning years and thus able to relocate to better neighborhoods for their families. Older boomers are approaching (or already in) retirement and seeking to downsize and lock in a lower cost of living.”

3. New-home construction focuses more on affordability.

Builders have been faced with higher land costs, limited labor, and concerns about the demand of the entry-level market. As such, they have shifted to constructing more higher-priced homes, which has caused new-home prices to rise significantly faster than existing-home prices. In 2016, they likely will shift to more affordable product to cater to the entry-level buyers.

4. Higher mortgage rates.

Mortgage rates will likely be volatile in 2016. But the recent move by the Federal Reserve to guide interest rates higher should push mortgage rates higher in the New Year than the historical lows they have been at for years. The 30-year fixed-rate mortgage will likely end 2016 about 60 basis points higher than today’s level. “That level of increase is manageable, as consumers will have multiple tactics to mitigate some of that increase,” Smoke says. “However, higher rates will drive monthly payments higher, and, along with that, debt-to-income ratios will also go higher.” The markets with the highest home prices will see the effects from the higher rates the most.

5. Rents to go up even higher.

Rental costs are skyrocketing, and the costs are likely to only go up in the New Year. More than 85 percent of the nation’s markets have rents that exceed 30 percent of the income of renting households. “Rents are accelerating at a more rapid pace than home prices, which are moderating,” Smoke says. “Because of this, it is more affordable to buy in more than three-quarters of the U.S. However, for the majority of renting households, buying is not a near-term option due to poor household credit scores, limited savings, and lack of stable income of the kind necessary to qualify for a mortgage today.”

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Kim Around the Web, Mortgage Information, Real Estate, Real Estate Closings, real estate news, Real estate trends by Kim Bregman
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Feds Lift Key Interest Rate

The Federal Reserve is raising interest rates after seven years of record lows. But it’s signaling that further rate hikes will likely be made slowly as the economy strengthens further and muted inflation rises.

The Fed’s move to lift its key rate by a quarter-point to a range of 0.25 percent to 0.5 percent ends an extraordinary seven-year period of near-zero rates that began at the depths of the 2008 financial crisis. Consumers and businesses could now face modestly higher rates on some loans.

The Fed’s action reflects its belief that the economy has finally regained enough strength 6½ years after the Great Recession ended to withstand higher borrowing rates. But the statement announcing the rate hike said the committee expects “only gradual increases” in rates going forward.

Rates on mortgages are not expected to rise much soon. The Fed’s benchmark rate doesn’t directly affect them. Long-term mortgages, for example, tend to track 10-year U.S. Treasury yields, which will likely stay low as long as inflation does and investors keep buying Treasurys.

But rates on some other loans, like credit cards and home equity credit lines, will likely rise, though probably only slightly as long as the Fed’s rate hikes remain modest.

For months, Chair Janet Yellen and other Fed officials have said they expected any rate hikes to be small and gradual. But nervous investors have been looking for further assurances.

The central bank’s target for the federal funds rate – the interest that banks charge each other – has been at a record low between zero and 0.25 percent since December 2008. At the time, Fed officials led by Ben Bernanke were struggling to contain a devastating financial crisis that triggered the worst recession since the Great Depression.

The recession officially ended in June 2009. But unemployment kept rising, peaking at 10 percent before starting to fall. The jobless rate is now at a seven-year low of 5 percent, close to the Fed’s target for full employment.

Some analysts expect the Fed to raise rates at every other meeting in 2016, for a total of four quarter-point moves. Others think that after Wednesday’s hike, the Fed could wait until June before raising rates again.

While Fed officials want to move slowly, an acceleration in inflation could force them to raise rates more quickly.

Filed under: Blog, boomerrang homebuyer, Exclusive Buyer Agent, First Time Homebuyers, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, Mortgage Information, Real Estate, Real Estate Closings, real estate news by Kim Bregman
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You Are Under Contract…What’s Next?

You searched for homes over the course of months or even years. You endured a series of offers and counter offers, property disclosures, inspections and reports. Finally, after so much excitement, stress and anxiety, the house hunt has come to an end.

But the story isn’t over yet. Here are some next steps to consider before you actually move in.

Plan any work well in advance:
Rarely does a buyer get a place that is truly in “move-in” condition. By the time you’ve signed a contract, you have lots of ideas about how you’ll live in this home, how you’ll customize it to suit you and your family, and what work needs to be done.

If the place needs work, don’t wait until you’ve closed to engage a painter, a floor re-finisher, or a general contractor. Either at your final walk-through or during a private appointment after you’ve removed your contingencies get the proper contractors in the house. Start getting bids for necessary work. If possible, have floor sanding, painting, demolition, or small fix-it work done before you move in. Real estate agents work with all kinds of tradespeople, so they’re often a great resource recommendations.

Set up the utilities:

Some people assume the utilities will work once they walk in on day one. While many utility companies have grace periods (the days between when the seller cancels service and the new owner calls), you can’t always assume this will be the case. If you have an out-of-town seller, they may have cancelled services the day they knew all contingencies were removed. In this instance, the grace period likely lapsed, and you may be stuck dealing with the electric company, waiting for an appointment or just being without power when you really want to start painting, fixing or cleaning.

The best plan is to call the utility companies and get service set up well before closing. If they haven’t received cancellation notice from the seller, let the seller know to take care of that.

Got the keys? Great, now change the locks:

Assume that every one and his brother has a set of keys to your new home. The seller’s real estate agent likely gave copies to his or her assistant, a painter, stager or even another agent at some point during the marketing period. That’s why the first person you should call after getting the keys is a locksmith.Spend the money to get all the locks changed right away. You’ll sleep better at night.

Hire a cleaning crew:

The Seller has an obligation to leave the property “broom clean”, but this in no way assures that the carpets have been cleaned, the floors mopped and the insides of the cabinets and drawers have been wiped down/ There’s nothing worse than showing up with the movers, dozens of boxes and your personal belongings only to discover the seller hadn’t had the place cleaned thoroughly.

Assume the worst and get a professional cleaning crew in there the minute after the closing. Even if the seller did clean, they may have done a poor job. You want to start life in your new home with a clean slate. The movers might make a mess while moving in. But the bones of the place will be sparkling clean and you won’t be scrambling to get cleaners in while the home is in a state of disarray as you unpack.

Have a handyman, small contractor or designer on call:

Moving in can take days, if not weeks, and is made up of the kind of stuff you wouldn’t wish on your worst enemy. Things like aligning your framed artwork, centering the couch in the living room or getting the large rug set up in the master bedroom can drive you crazy. Nailed multiple holes in the wall in an attempt to get your family photos lined up on the staircase? Not all of us are cut out to do this kind of stuff.

While it may seem like a luxury, investing a few hundred dollars in hiring someone to take orders, help with setting up and take over some of these mindless tasks will save time and potentially relieve you of a giant headache.

Thinking ahead is the way to go:

The journey to home buying could have been anything from fun to stressful and emotional. When the closing date draws near, you’re probably exhausted. But taking a little extra time to plan ahead will save you time, money and a lot of hassle. And it will make the move into your new home so much more satisfying.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Maintenance, Homebuyer Advice, House Closings, Real Estate, Real Estate Closings, real estate news, Relocation, western north carolina real estate by Kim Bregman
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10 Reasons Why Another Real Estate Crash is Unlikely Today

How concerned should investors and homebuyers be that we’re headed for another real estate crash as we approach the 10-year anniversary of the infamous 2006-2007 housing bubble? Not at all.

Although buyers are paying spectacular prices for commercial properties and trophy homes, just as they did then, this time price increases are being fueled by foreign investors seeking diversification and a haven for their funds, as well as investors on the hunt for a low interest-rate environment.

Real estate is still a favorite life raft for nervous investors, who are seeking safety amid market volatility.

This has led to record real estate prices, which some have interpreted as a sign that the U.S. real estate market is once again climbing into bubble territory and headed for another crash. But a repeat of the 2009 real estate implosion that followed the collapse of the equities market in 2008 is highly unlikely this time.

Here are the top 10 reasons why:

1. Most Americans Have Refinanced to Fixed Rate Loans

Most Americans who could refinance to a fixed-rate mortgage have already done it. As a result, the impact of interest-rate shock when short-term ARMs re-adjust will be minor, compared with what happened in 2008-2009. During that period, many Americans could no longer afford their new mortgage payments and defaulted.

2. Bank Repossessions are Flushing Out Old Distressed Properties

Bank repossessions recently rose to the highest levels in more than two years, signaling that banks are dealing with properties in default and flushing out old distress, rather than ingesting more. Foreclosure activity continues to fall.

3. Loans in Foreclosure Are at the Lowest Level Since 2007

Despite an increase in bank repossessions, the percentage of loans in foreclosure nationwide is just 2.1% — the lowest level since 2007, according to the Mortgage Bankers Association.

4. There’s Less Risk of a New Mortgage Bubble

The market is no longer fueled by a surge in new housing loans based on loose credit standards. Tighter requirements for loan approvals that followed the 2009 mortgage meltdown reduced the number of foreclosures nationwide to a 10-year low. This tempers the number of real estate bubbles that can pop and, if the market slows down, there may be a contraction, rather than a pop. New TRID requirements are further evidence of guarantying a healthy mortgage market.

5. Interest Rates Are Likely to Remain Low for the Foreseeable Future

The likelihood the Federal Reserve will raise key interest rates recently lessened, following the economic disruption coming out of China. As a result of recent market volatility around the globe, rates have not climbed as expected and the risk of higher rates has diminished for the foreseeable future. It’s also important to mention that China’s slowdown could also positively impact U.S. property values, as global funds seek relative stability in the U.S. real estate market.

6. First-Time Buyer Assistance Programs are Luring New Buyers into the Market

New initiatives have been put in place to assist prospective first-time homebuyers. At the beginning of 2015, the Federal Housing Administration (FHA) moved to reduce annual mortgage insurance premiums by up to $900 per year. This move could push home sales up to 5.6 million — the most seen since 2006- and it could introduce as many as 140,000 new buyers to the market, according to the National Association of Realtors. The FHA’s program aims to transition millennials and others from renting to owning a home.

7. Job Creation Indicates the Economy is Getting Stronger

The United States has added jobs at a steady rate over the past five years, and many of the jobs that were lost during the recession have been brought back. Additionally, the quality of jobs being created has improved as the economy has recovered.

8. Average Residential Home Prices Have Risen at a Slow, Steady Pace

Unlike the high-end, luxury market, prices for average residential homes have risen at a slow, steady pace. According to the S&P/Case-Shiller Composite 10-Home Price Index, residential home prices remained 15 percent below their April 2006 peak as of July 2015.

9. New-Home Construction Has Not Recovered from the Downturn

The supply of existing homes for sale today is lower than it was in 2000, although the population has grown more than 14%. New, single-family starts are 60% below the 2006 peak and roughly 25% below the average for the past 15 years.

10. Commercial Real Estate Remains Below Peak Levels

Commercial real-estate fundamentals are similarly healthy, and although commercial real estate prices have increased steadily since the crash, they still remain below peak levels. Vacancy rates are at or near all-time lows for apartments and warehouses, and are at their lowest post-crisis point for office and retail properties.

Commercial real-estate development also remains more than 25% below its pre-recession peak, which has led to improved property fundamentals, with both occupancy rates and rents rising.

The real-estate market today has a stronger foundation than it did in 2006, thanks to more disciplined and conservative credit underwriting of debt and a market that is much healthier than it has been at any point during the past decade.

Nearly 10 years after the bubble began, the message to investors is clear: Rest assured you are looking at a chastened and more disciplined market in which to participate — not another looming bubble.

By Chris Leavitt, Contributing Writer for The Street

Filed under: Blog, Down Sizing, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Home Maintenance, Homebuyer Advice, House Closings, Kim Around the Web, Mortgage Information, Real Estate, Real Estate Closings, real estate news, Relocation, western north carolina real estate by Kim Bregman
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The Foreign Buyers Guide – What you need to know about buying real estate in the United States

For many a foreign national, the United States has always been a great place to invest in.

Buying Real Estate in the United States does not give foreign owners any rights or privileges regarding legal stay or status. If you’re interested in staying in the states longer than allowed by a standard visa, contact an immigration lawyer.

By determining the primary use for your property and how long you plan to own it, you’ll be able to provide information to your real estate agent that will help guide the search and sale.

How will you use the Property?

Before you start your property search, it’s important to think ahead to how you’ll use the home once the deal is done.

Will this be a vacation home?
A home to stay in while doing business in the United States?
A home for your children while they attend college in the States?
An investment?
An eventual long-term residence?

The way U.S. real estate transactions are carried out may differ from your home country. Each State in the US has its own set of rules regarding the purchase of real estate, including the type of purchase contract used, the method of closing the sale and even the duties and titles of the individuals involved.

Several important U.S. real estate practices that are worth noting are:

In the United States, real estate listing information is shared by agents using multiple listing services ( MLS) and consumers can access that same information using real estate sites such as com or Realtor.com. In many other parts of the world, real estate is a fragmented business and buyers have to go from agent to agent to find a property.
In some countries, it is typical to pay a fee to the agents who are scouting properties on your behalf and showing you around. In the United States, the sales commission is paid by the seller who has a listing agreement with the Seller, so buyers don’t pay anything to have an agent work on their behalf if it is being advertised in the MLS system. It is always advisable for a buyer to work with an Exclusive Buyer Agent who will protect the buyer’s interest in the transaction. Make sure you ask any agent you contact what their “agency relationship” is to you. Each state has different forms of agency and many agents do not work for the benefit of the Buyer.
In the United States, real estate agents need licenses to operate. The licensing laws of each state differ regarding how much education is required, the type and depth of licensing examinations, and whether continuing education courses are required once an agent becomes licensed. The licensing system was designed to ensure real estate agents are qualified to guide consumers through the maze of finding, evaluating and financing real estate.

Foreign buyers will also want to give consideration to issues such as currency exchange rates, international wire transfers, banking systems, multi-national taxation and accounting issues, and import/export restrictions regarding currency and household goods. It is recommended that you consult with an accountant and attorney before finalizing any transaction.

Foreign buyers are eligible to buy single-family homes, condominiums, duplexes, triplexes, quadru-plexes and townhomes. Housing cooperatives or co-ops often have rules prohibiting foreign ownership. That’s because co-ops generally require that a buyer’s source of income be from the United States and that most of the majority of the buyer’s assets be kept in the U.S.

Financing or Paying Cash?

Qualified foreign buyers with a 30 to 40 percent down payment can often obtain financing for their U.S. real estate purchases. MANY BANKS REQUIRE FOREIGN BUYERS to have a specific amount ($100,000 or more) on deposit with the bank while others set loan limits of $1 million to $2 million. You may also be required to present a minimum of three months of bank statements.

The U.S. home loan market offers an array of safe, affordable mortgages, including some that will allow Muslims to buy a home without violating Islamic laws against paying interest.

Before applying for a U.S. mortgage, you must first establish credit and earn a good credit score. You can start building your credit score by opening U.S. bank and credit card accounts. You’ll also want to be sure to report all income on your tax returns. Lenders use this income information to determine how much money they’re willing to loan you to buy a home.

While you don’t necessarily need to be a citizen or even have a green card to buy a home in the U.S., you will need an Individual Taxpayer Identification Number.

All cash purchases are permitted, but U.S. law mandates that cash transactions over $10,000 be reported to the federal government. The requirement for reporting involves everyone connected to the transaction (purchaser, real estate agents, attorneys and title companies). The government wants to know how you earned the money and that it was legally obtained. Cash buyers can potentially save money on mortgage application fees, loan origination fees, appraisals and title insurance.

Should I purchase U.S. property in my name?

Foreign investors can purchase property directly – in their own names – or through some sort of business entity, such as a domestic corporation, foreign corporation, limited partnership, joint venture, real estate investment trust or limited liability company.

How the property will be used should play into your decision. Additionally, the structure through which you purchase your property can have dramatic tax consequences. Your real estate attorney and accountant should be able to provide counsel concerning your options.

Do I have to travel to the U.S. for the closing?

While you may very well want to attend your real estate closing, it is not necessary. In the event that you cannot or choose not to attend your closing, you must execute a “Power of Attorney.” This is a written document authorizing another person to represent you and sign on your behalf. Some lenders may require that you be present in the US to sign their loan documents. This is something you should inquire about when selecting a lender if you do not plan on traveling for the closing.

How will a U.S. real estate purchase affect my taxes?

A foreign property owners’ tax liability in his home country will vary depending upon where the purchaser is from and whether that country has a tax treaty with the United States. Consult a tax attorney familiar with your home country’s treaty to get answers to tax-related questions.

The United States government requires that foreign nationals pay U.S. income taxes (state and federal) on any net income (rental revenues less expenses) received from rental property. If tax returns are not filed in a timely fashion, a tax of 30 percent of the gross rental income may be assessed. Even if you’re incurring losses in the early years of your investment and you don’t owe any taxes to the government, you still must file your tax returns in a timely manner or be subject to financial penalty.

What is FIRPTA?

FIRPTA refers to the Foreign Investment in Real Property Tax Act of 1980. This ruling authorizes the United States to withhold income tax when property is sold, exchanged, gifted, transferred or liquidated by a foreigner. The Internal Revenue Service takes 15 percent of the proceeds and the state government will also take a percentage (if applicable). When a US tax return is submitted reporting the capital gains tax, if there is any refund due, that money will be refunded to the filer.

If the buyer of the home from the foreign national investor will reside in the home more than 50% of the time and the home sales price is under $300,000.00, the purchaser is not obligated to retain the 15% tax.

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