The foreign owner’s taxes, without fine print
Florida is one of the friendliest states for foreign owners — no state income tax. But three federal topics deserve your attention before you buy, not after.
What you pay each year just for owning
Property tax is the main annual cost: on average roughly 1% of value effectively — about $5,000–$6,000 a year on a $500,000 home, varying by city. It is paid to the county and requires no federal filings.
One important detail: the homestead exemption (which lowers taxes for residents on their primary home) requires permanent Florida residency — a tourist visa does not qualify. Budget the full tax.
Florida has no state income tax for individuals — a big part of why it wins against New York or California.
If you rent it out: 30% gross… or far less with the right election
A nonresident’s rental income is subject by default to a 30% withholding on GROSS income — no expense deductions. That is the bad option.
The alternative almost everyone chooses: treating the rental as "effectively connected income" (Form W-8ECI + annual 1040-NR with an ITIN). You then pay tax on NET profit — after management, HOA, insurance, property tax, depreciation, and interest — which in many cases cuts the tax to a fraction, or to zero in early years.
For short-term rentals (under 6 months), add Florida sales tax and the county tourist development tax — in Palm Beach the combined rate is around 13% on short-term rent, normally charged to the guest.
The tax nobody tells you about: estate tax with a $60,000 exemption
For citizens and residents, the federal estate tax exemption runs in the millions. For NONRESIDENT owners, the exemption on US assets is just $60,000 — everything above can be taxed at rates up to 40%.
A $600,000 property held personally by a nonresident can generate a six-figure estate bill. That is why many foreign buyers structure the purchase (foreign-parent LLC structures, trusts, life insurance) BEFORE closing. Restructuring later is possible but costlier. This one paragraph can save your family more than the rest of the guide — take it to an estate-planning attorney.
When you sell: capital gains and FIRPTA
Your gain at sale is taxed as capital gains (for nonresidents, generally at long-term rates if held over a year — 0/15/20% by amount), and the 15% FIRPTA withholding applies on the gross price as a prepayment. We have a full FIRPTA guide covering the exceptions and the refund process.
Also remember your home-country side: many countries tax their residents’ worldwide income. Treaties and foreign tax credits usually prevent double taxation, but they require filing on both sides. An accountant who knows both systems is worth every penny.
Educational information, not tax or legal advice. Figures and rules change; before buying, renting, or structuring, consult a CPA and an attorney experienced with international clients.
Frequently asked questions
Do I pay US taxes just for owning?
Only the annual county property tax (~1% of value). With no rental income and no sale, there are no federal filings to make.
How much tax do I pay if I rent my property?
By default, 30% withholding on gross rent. With an ITIN and the effectively-connected election (W-8ECI + annual 1040-NR), you pay on net profit after all expenses and depreciation — almost always far less.
What happens to my property if I die as a nonresident?
Federal estate tax applies above $60,000 of US assets, at rates up to 40%. It is the biggest avoidable risk for foreign owners — managed by structuring ownership with an attorney before you buy.
Should I buy through an LLC?
It depends on the goal: an LLC adds liability protection and, structured correctly, helps with the estate-tax issue — but it can change capital-gains treatment and adds annual costs. It is an advisory decision, not a checkbox.
