The State of Florida is a wonderland of real estate investment opportunities for non-resident alien investors. With hundreds of major cities and suburbs to choose from, commercial and residential properties waiting for the right investor abound. However, there are many pitfalls to avoid when investing in property in Florida – and these pitfalls are particularly risky if you are a non-resident alien.
In the first part of this series, we explore five of the areas where non-resident aliens should focus their attention when selecting advisors to help them with a real estate transaction.
#1 Find a Florida Lawyer that can Speak your Language
If you are not 100% fluent in English and knowledgeable of Florida law, it is wise to find a lawyer who can speak your language and who has a first-hand understanding of your culture – including the business practices and laws of your home country. A bilingual professional licensed to practice law in Florida can understand how the local Florida laws and customs relate to you and can explain them clearly in the context of your country’s laws and customs.
A local lawyer who speaks your language and understands where you come from can anticipate the specific areas that need the most attention and evoke any bilateral agreements between the US/Florida and your home jurisdiction.
#2 Get a CPA with Experience Representing Non-resident Alien Investors
One of the first lessons in doing business in the US is learning how to manage your relationship with the Internal Revenue Service (IRS). There are many areas where you will be treated differently for tax purposes and a good CPA with experience representing non-resident aliens can help you to navigate through these areas. The Foreign Investment in Real Property Tax Act (FIRPTA) is one major example of exceptional treatment of non-resident real estate investors. It requires that non-resident aliens withhold 15% of the gross proceeds of a transaction when disposing of a real estate investment anywhere in the US. This is a reality that must be accounted for when calculating your return on investment on any property and a good CPA will be able to account for this and other similar exceptions for non-resident alien real estate investors.
“ … find a lawyer who can speak your language and who has a first-hand understanding of your culture.”
#3 Deal with a Banker from the Right Bank
The US banking system is designed in large part to support the needs of US citizens and Green Card holding residents. Because of this, as a non-resident alien, you may encounter a number of obstacles to opening a bank account, getting a US currency debit card and generally carrying out day-to-day transactions within the United States.
The good news is that there are a number of Florida-based banks that specialize in providing US currency accounts for non-resident aliens. They often assign a personal banker to help you deal with your unique requirements and provide you with personalized attention. Seek these banks out with the help of your Florida-based lawyer and experienced CPA.
Create a shortlist of the banks that specialize in serving the non-resident alien business community and decide on the bank for you based on your specific investment and banking needs.
#4 Use a Real Estate Lawyer Rather than a Title Company
In Florida, you can choose between using a real estate lawyer or a title insurance agent to facilitate your commercial or residential real estate company. Either plays a similar role in the real estate transaction, with important differences. When you look at the pros and cons of each, it is often wiser to use a real estate lawyer. This is because most real estate law firms offer the escrow and title search services that are the mainstay of title agents, plus law firms can offer legal advice. Title insurance agents are not able to offer legal advice and cannot draft and review legal documents. Furthermore, real estate lawyers are hired by you directly and represent your best interests. Title insurance agents serve the title insurance companies. They do not represent you but are bound to represent the interests of the insurance companies.
Non-resident alien investors, require a legal professional that looks out for your best interests and can offer you valuable legal advice when needed. Since the cost of a real estate law firm is similar (and many times less) than the commission you would pay to a title insurance agent, you can say that you get more value for your money with a real estate lawyer.
See Part II of this series for more important points to consider for non-resident alien investors interested in Florida real estate.
Closing Real Estate Transactions with South Florida Law PLLC
At South Florida Law, we are committed to helping non-resident alien investors close real estate transactions in the state of Florida. We help businesses and individuals buy and sell residential and or commercial properties ranging from single-family homes to warehouses. In cases where it is necessary to navigate through obstacles in order to close a transaction, we have the big firm resources to dedicate the time and effort where it is needed. At the same time, we provide personalized service and attention to detail in your case at a price point that can only be achieved with a boutique firm of our size.
In addition to advising on real estate matters, forming corporations and drafting documentation, South Florida Law is also a full-service title agency and can conduct title search and secure title insurance for our real estate clients. We are fluent in English, Russian and Farsi and (subject to ISA restrictions and any relevant Executive Orders) can serve non-resident alien investors from the countries and territories where those languages are spoken.
Are you planning to buy or sell in Miami, the Keys, Broward or Palm Beach County? Are you looking for a closing attorney you can rely on? Call South Florida Law today on (954) 900-8885 or reach out to us via our contact form.