Q&A

1.-What are the stages of the property purchase process?

The stages of the property purchase process are primarily three: registration, purchase, and post-purchase.

A. Registration

a.1 Registration with the Florida Department of State (www.sunbiz.org). Depending on the legal structure you choose, the corresponding tax structure will apply to you annually. Generally, a structure commonly used by foreigners to purchase properties is the “Limited Liability Company” or LLC. You must choose a fictitious name for your LLC

a.2 Application for your EIN (Employer Identification Number) from the Internal Revenue Service (IRS)

a.3 Opening an LLC bank account at a local U.S. bank. It is also important for the company owners to have a passport

a.4 You must inform the Florida Department of State annually that the company remains active

B. Purchase

 b.1 The property search is conducted by evaluating different alternatives until finding the one that fits your requirements in terms of location, price, architecture, age, etc.

b.2 If purchasing a property with a mortgage, you must obtain a letter from the bank to prove you have the available funds for the down payment, plus a pre-approval letter from the bank to demonstrate to sellers that you will be able to secure financing for the remaining amount to acquire your property. If purchasing with your own funds (without a loan), you must obtain a letter from the bank to prove you have the liquid funds available for the total value of the property

b.3 The offer is communicated through a Purchase and Sale Agreement or PSA, ideally with an inspection and appraisal clause by experts who confirm that it is in good condition and worth what is being offered

b.4 If the PSA is signed, they are committed, and by means of a transfer to an escrow account (an account specifically designated for the purchase of the property) held by a title insurance company, the property is reserved

b.5 The title insurance company reviews the property title. This review ensures that the property title is free of issues (such as outstanding taxes, delinquent mortgages, among others) and that the seller is legally authorized to sell it

b.6 Title insurance is acquired from the title insurance company (mandatory in the state of Florida) to protect yourself financially in case there are still problems with the property title after the sale (such as fraud, mental incompetence, or others). By this step, you should already realize how important it is to choose the title insurance company that will handle your transaction well

b.7 Additionally, you can protect yourself legally through a written guarantee or warranty deed. This document guarantees by the seller that the property has no title issues and that they have the right to sell it to you

b.8 If you have applied for a mortgage, the bank reviews the transaction to release the funds

b.9 Just before closing the purchase, it is advisable to conduct a final inspection of the property to verify that it remains in the agreed-upon conditions and has not been affected by the move, and that everything included in the purchase remains on the property

b.10 You attend the closing meeting where a lawyer or agent reviews the legal aspects, closing contracts are signed and notarized, and the total amount of the property is transferred

b.11 Congratulations, the property is yours!

C. Post-Purchase

c.1 Tenants are sought according to the desired type of rental: short-term or long-term. The investor must conduct background checks on potential tenants, sign a contract with the chosen candidate, keep records of property expenses, carry out repairs and maintenance when necessary, etc. All of the above entails a cost of time and labor, so it is very common for owners to hire the services of a company to manage their property, which deposits the monthly rent into their bank account after deducting the commission charged for property management. A standard monthly management fee for traditional or long-term rentals should be between 5% and 10% of the rental value

c.2 Accounting services must be contracted, since owning an investment property in the United States implies annually declaring income to the U.S. Internal Revenue Service (IRS) and paying taxes if there are profits

c.3 It is highly recommended to hire legal services, because if the investment has been made through an LLC, it is very important to draft the Operating Agreement as soon as possible. Although this document is not mandatory in the state of Florida, it is not advisable not to have it, as it defines who the owners of the property are, how profits will be distributed (it may differ from the percentage each member has in the company), in case of the death of a company member the rights of the heirs and the other members, quorum for decisions, etc. Without an Operating Agreement, in case of death, the inheritance is left to the state of Florida, whose criteria may not align with your own personal interests

2.-How do mortgages work for foreigners buying property in Florida?

Non-resident foreigners can also obtain mortgages from U.S. financial institutions for up to approximately 70% of the property value. For this, the following is necessary:

a Demonstrate an income level, for example, through your salary payments

b Demonstrate a savings level through your bank statements

c Certification letter from an accountant regarding your financial statements

d Verification of residence with water, electricity, or other utility bills in your name

e Have a valid passport/visa for the United States

In addition to the mortgage interest rate, you can negotiate the fees charged by the bank at the time of purchasing the property.

While it is true that if you do not take out a loan to buy the property, you save on paying monthly interest to the bank, there is an important benefit that many investors overlook when making their investment: if you decide to take out a mortgage, the bank participates in the review of the property and documentation to avoid future legal problems with the property. Given the above, many investors buy properties with bank loans even when they do not need to (some requesting the minimum possible amount) to involve the bank in the purchase process and thus mitigate risks.

Finally, remember that if you take out a fixed-rate loan, you will have exactly the same fixed monthly payment for the next 20 or 30 years, so you will be protected from inflation in the United States.

3.-What are the advantages of buying a property in Florida through a Limited Liability Company (LLC)?

The LLC has significant benefits, among which the following stand out:

a. Owners enjoy greater privacy regarding their identity, as their names are not made public

b. Protection of personal assets. In case of a lawsuit, the LLC’s liability is limited to the investment in the property, thus protecting the personal assets of its members

c. It is possible to deduct property expenses to reduce taxable income and, consequently, the payment of taxes. For this reason, an organized record must be kept (there is software that can help with this, such as Stessa) of the expenses associated with the purchase and operation of the property. Ideally, all income and expenses related to the property should be managed through a designated bank checking account. Many expenses can be deducted. For example:

c.1 Property management fees paid to third parties

c.2 Property insurance

c.3 Maintenance & repairs

c.4 Mortgage interest

c.5 Property depreciation (decrease in the property’s value over time or wear and tear from use)

c.6 Property taxes

c.7 Advertising (marketing campaigns, online advertising, brochure printing, etc.)

c.8 Legal fees (directly related to the property: expenses for lawyers, accountants, and software for recording business transactions)

c.9 Bank fees (if you have a separate account exclusively for your property)

c.10 Travel related to the property. For example, plane tickets to Florida for the acquisition of the property. It can also include car rentals, taxis, tolls, food, accommodation, laundry, etc. It is important to maintain an accurate and detailed record of all expenses, including dates and descriptions, as well as of meetings, indicating the date, the topic discussed, and the participants

d Very flexible in its operational form. For example, it can distribute profits differently from the ownership percentage each member holds. Its operation is defined in the Operating Agreement

e It has no restrictions on the number of members it can include

f Easy to manage as it does not require formal annual meetings

Access a comprehensive financial analysis of your property (including projected income and expenses) with Real Estate Financial Intelligence S.P.A.

4.-Will I have to pay taxes if I sell my property in the future?

Yes. If you sell the property at a profit in the future, you will be subject to Capital Gains Tax, which is a tax levied on the profit made from the sale of a property. This occurs when it is sold at a higher price than the original purchase price (if the property increases in value but is not sold, this tax does not apply; it is only triggered upon sale). On the other hand, because Florida is a state with many tax benefits, it does not charge a capital gains tax for LLCs as sole proprietorship or as a partnership; the tax is only paid at the government or federal level.

It’s important to keep in mind that other items such as selling costs and property improvements (not maintenance repairs, but improvements that increase its value) reduce the profit and therefore the tax payable, so you should be organized, keep those records, and seek advice from a good accountant.

Fortunately, there is also the possibility of deferring capital gains tax through a 1031 exchange by reinvesting the proceeds from the sale of the property into another like-kind property (don’t be confused, they can be of different types) of equal or greater value (of the sale price minus selling costs), closing within 180 days after the sale (with 45 days within the 180 to designate this new property) through the use of an intermediary. You can also buy the new property before selling your own, which is known as a reverse 1031 exchange, with the same deadlines that apply to the previous case. The investor should seek advice before using this mechanism, as there are some specific limitations for its use by the IRS.

To facilitate your planning, Real Estate Financial Intelligence S.P.A. ‘s financial analysis incorporates a capital gains tax estimate for future property sale simulations.

5.-Do I have to pay taxes on the income generated from renting out my property in Florida?

Yes. You must pay Income Tax annually on the profits you obtain from renting out your property, that is, the remainder between the rental income minus expenses, mortgage interest, and depreciation. For this declaration, it is necessary to have the services of an accountant, preferably one who already has experience with foreign clients if that is your case. Generally, the final amount to pay is low (even $0 in many cases) if you keep an organized record of your property expenses that the IRS allows to be included in your return. But don’t be confused, even if you leave the profits in the LLC’s bank account, you will have to pay taxes if you have (positive) earnings for that year. In the very common case of properties acquired through an LLC as a single owner or partnership, income tax only needs to be paid at the federal level, since Florida does not charge state income tax.

Real Estate Financial Intelligence S.P.A. incorporates an annual income tax estimate within its financial analysis to facilitate your planning.

6.-As a non-resident foreigner in the United States, do I have to pay taxes in my home country on my earnings?

Only if the IRS were to consider a foreign investor a tax resident would they be obligated to pay global taxes, meaning on the income you receive in Florida and throughout the rest of the world. To avoid this and only pay taxes on your investment in a property in Florida, you simply need to be careful not to be physically present in the country for at least:

a 31 days in the current year, and

b 183 days (or more) during a 3-year period (the current year and the 2 preceding years), counting: all the days you were present in the current year + (1/3) * days present in the previous year + (1/6) * days present 2 years prior

For example, if you were in the United States for a total of 32 days in 2025, 60 days the previous year, and 60 days two years ago, that would be: 32 + (1/3)*60 + (1/6)*60 = 62 days, which is less than 183 days, so you would not be classified as a U.S. resident for the year 2025. Tip: If you don’t want to be classified as a resident, visit the country for 121 days or less each year.

PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS CONTAINED HEREIN

OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM REAL ESTATE FINANCIAL INTELLIGENCE S.P.A., OR ANY OF THEIR RESPECTIVE AGENTS OR REPRESENTATIVES, AS LEGAL, BUSINESS, FINANCIAL, TAX OR OTHER ADVICE. PRIOR TO INVESTING, A PROSPECTIVE INVESTOR IS

STRONGLY URGED TO CONSULT WITH, AND MUST RELY UPON, HIS, HER, OR ITS OWN ATTORNEY

AND FINANCIAL AND TAX ADVISORS TO FULLY UNDERSTAND THE CONSEQUENCES OF AN

INVESTMENT AND ARRIVE AT HIS, HER, OR ITS OWN EVALUATION OF THE

INVESTMENT, INCLUDING THE MERITS AND RISKS INVOLVED IN SUCH INVESTMENT.

THERE ARE TAX RISKS INVOLVED WITH INVESTING. THE TAX

CONSEQUENCES ARE COMPLEX AND WILL NOT BE THE SAME FOR ALL INVESTORS. INVESTORS

ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS BEFORE INVESTING.

THE INVESTMENT WILL INVOLVE A HIGH DEGREE OF RISK. THE INVESTMENT IN THE IS SUITABLE ONLY FOR SOPHISTICATED INVESTORS AND REQUIRES THE FINANCIAL ABILITY AND WILLINGNESS TO ACCEPT THE HIGH RISKS. INVESTORS MUST BE PREPARED TO BEAR SUCH RISKS FOR AN INDEFINITE PERIOD OF TIME. NO ASSURANCE CAN BE GIVEN THAT THE INVESTMENT OBJECTIVES WILL BE ACHIEVED OR THAT INVESTORS WILL RECEIVE A RETURN ON THEIR INVESTMENT.

ALL INFORMATION CONTAINED HEREIN, INCLUDING ANY ESTIMATES, PROJECTIONS OR

PRO FORMA FINANCIALS, IS BASED UPON INFORMATION PROVIDED BY REAL ESTATE FINANCIAL INTELLIGENCE S.P.A. OR THIRD PARTIES. CERTAIN ECONOMIC AND FINANCIAL MARKET INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM PUBLISHED SOURCES AND/OR PREPARED BY OTHER PARTIES. WHILE SUCH SOURCES ARE BELIEVED TO BE RELIABLE, NONE OF REAL ESTATE FINANCIAL INTELLIGENCE S.P.A., ITS RESPECTIVE AFFILIATES NOR ANY OTHER PERSON ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION, AND NO REPRESENTATION OR WARRANTY IS MADE WITH RESPECT THERETO. UNLESS OTHERWISE SPECIFIED HEREIN OR IN A SUPPLEMENT, ALL INFORMATION CONTAINED HEREIN HAS BEEN COMPILED AS OF

THE DATE SET FORTH THEREIN.

ANY PROJECTIONS OR OTHER FORECASTS CONTAINED HEREIN ARE BASED ON SUBJECTIVE

ESTIMATES AND ASSUMPTIONS ABOUT CIRCUMSTANCES AND EVENTS THAT HAVE NOT YET

TAKEN PLACE, MAY NEVER TAKE PLACE AND ARE SUBJECT TO MATERIAL VARIATION.

ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT ANY PROJECTED OR FORECASTED RESULTS

WILL BE ATTAINED. TARGETED OR POTENTIAL PERFORMANCE RESULTS MAY NOT BE ACHIEVED AND THERE CAN BE NO ASSURANCE THAT THE INVESTORS WILL ACHIEVE FAVORABLE RESULTS.

ANY PRIOR INVESTMENT RESULTS BY REAL ESTATE FINANCIAL INTELLIGENCE S.P.A. OR ANY OF ITS

AFFILIATES CONTAINED HEREIN ARE PROVIDED FOR ILLUSTRATIVE PURPOSES

ONLY AND ARE NOT NECESSARILY INDICATIVE OF THE POTENTIAL INVESTMENT

RESULTS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.