Taxes for foreign owners of Miami property: property tax, rental income and FIRPTA

If you are a foreign national who owns a condo in Miami, you pay property tax (around 1.7% to 2% of taxable value, depending on the municipality), the IRS withholds 30% of gross rental income unless you elect to be taxed on net income, and when you sell, FIRPTA withholding takes 15% of the price (10% in some cases for homes between US$300,000 and US$1 million). Florida has no state personal income tax.

These are the taxes investors from Colombia, Mexico and Spain ask about most. This is general information: your specific situation depends on your country of residence and how you buy, so always review it with an accountant.

Property tax in Miami-Dade

It is calculated in "mills": one mill equals US$1 for every US$1,000 of taxable value. Using the total rates adopted for 2024 by the Miami-Dade Property Appraiser:

The Homestead exemption, which lowers the taxable base, only applies to U.S. citizens or permanent residents who live in the property. A nonresident foreign investor does not qualify.

Income tax on your condo's rental income

According to the IRS, rental income from U.S. real estate received by a nonresident alien is taxed at 30% of gross income, with no deductions, if it is not connected to a U.S. trade or business.

The alternative is the Section 871(d) election: you treat the rental income as connected to a business, you can deduct expenses (management, maintenance, depreciation) and you pay tax on net income at graduated rates. To avoid the 30% withholding, you give Form W-8ECI to the property manager who pays you.

Florida has no state personal income tax, according to the Florida Department of Revenue.

When you sell: FIRPTA

When a foreign national sells, the buyer generally must withhold 15% of the sale price and send it to the IRS. That withholding works as a prepayment of the tax that is settled on your return.

• If the price is US$300,000 or less and the buyer will use it as a residence, there is no withholding.
• If the price is between US$300,000 and US$1 million and the buyer will use it as a residence, withholding drops to 10%, according to NAR.
• You can request reduced withholding with Form 8288-B.

Estate tax

For a nonresident alien, U.S. assets worth more than US$60,000 at the time of death require filing Form 706-NA, according to the IRS. Some treaties can improve that treatment. This is one reason many investors ask their attorney whether they should buy in their own name or through a company.

Frequently asked questions

Do I need an ITIN to buy? To buy, you are asked for a passport and, if you finance, proof of income and source of funds. You need the ITIN to file income tax returns in the United States, and you apply for it with Form W-7.

Should I buy through an LLC? It depends on your country of residence and your estate plans. It is a decision to make with an accountant and an attorney.

Sources

• Miami-Dade Property Appraiser: 2024 adopted millage rates
• Miami-Dade Property Appraiser: exemption requirements (Homestead)
• IRS: nonresident aliens with real property in the U.S.
• IRS: FIRPTA withholding
• NAR: FIRPTA changes (10% rate)
• IRS: estate tax returns for nonresidents
• Florida Department of Revenue: personal income tax

This content is for informational purposes only; consult a tax advisor and a Florida-licensed attorney before investing.