Home Buying in Kissimmee>Question Details

Nancy, Other/Just Looking in New Brunswick, NJ

We are canadians looking to invest in the vacation home market in the Orlando area, however property taxes

Asked by Nancy, New Brunswick, NJ Thu Jun 12, 2008

levied on non-residents are said to be out of this world. Is this true?

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5
Colin’s answer
Just to clarify - I believe that the 10% Foreign Investor Tax that Linda refers to below is actually a temporary withholding (generally known as "FIRPTA") rather than a tax. Once your final IRS calculation is done, post-sale, the 10% is returned to you LESS any tax actually due. So if you made no "profit" according to the IRS basis of calculation, you would receive a full refund - as is likely to be the case with many overseas holiday home (i.e. non resident) buyers who sell now after purchasing at the price peak a couple of years ago.

As ever, though, you are strongly recommended to speak to a professional tax guy (rather than a Realtor) when you get into this more complex stuff. As a UK accountant, I can honestly say that I use a CPA for US tax advice, just because of the sheer befuddlement of the US tax system.

Regards

Colin
0 votes Thank Flag Link Fri Jun 20, 2008
Nancy:
Property taxes are more if you are a non-Homesteaded property owner. If the home becomes your primary residence, then you can benefit from the Homestead exemption. If you already have a primary home then you would be taxed on a non-Homestead exemption, as would anyone in the United States or Foreign countries. Taxes are based on millage rates for each city/town per assessed values by our County Tax Collectors.
The tax you might be thinking of is the Foreign Investor Tax which is charged if you own a property in the U.S. and sell it, but you do not have a Social Security number in the U.S., this is a 10% tax based on the purchase price which is paid to the IRS. If you need more information, I will be happy to provide this for you. You would be considered a Foreign Investor and subject to this 10% tax, only when you sell.
0 votes Thank Flag Link Thu Jun 12, 2008
Hello Nancy,

Broker Bryant has hit the nail on the head.
Also, Florida passed a law that counties can't raise taxes on your home more than 10% a year.

http://dor.myflorida.com/dor/property/10perassess.pdf
and questions
http://dor.myflorida.com/dor/property/nonhomestead_faqs.pdf
0 votes Thank Flag Link Thu Jun 12, 2008
Hello Nancy, there are two issues with taxes. First is the homestead excemption that as Broker Bryant menitioned reduces the taxed value by $25,000. That has actually just been increased for next year to $50,000. Also there is something called Save Our Homes. When the home is your primary residence and is homesteaded your taxable value cannot go up more than 3% in a year, or the Consumer Price Index, whichever is less. For non-homestead properties such as you would be it is capped at 10%. We will be voting for a 25% reduction in property taxes in November along with a 5% cap for non-homesteaded properties instead of the 10% cap. If you have any questions contact me. I can also help you get information on what your taxes would be on any property you may be interested in.
0 votes Thank Flag Link Thu Jun 12, 2008
Nancy, the biggest difference is that folks that live in the house in Florida get a "Homestead exemption" which reduces the tax assessed value by $25,000 and effectively saves about $400-$600 a year on taxes. So it's not that you are taxed at a higher rate it's just you don't qualify for the exemption. I hope this helps.
Web Reference: http://www.brokerbryant.com
0 votes Thank Flag Link Thu Jun 12, 2008
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