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Should I buy a new property or a resale property?
Off-plan properties are excellent for investor clients who are looking to put down the minimum deposit with a delayed completion.
The advantage of this is that significant capital appreciation can be gained with an outlay of typically between 10% and 20% with the balance payable on completion. For those wishing to move quickly, we offer a choice of re-sale properties normally available within 4 to 6 weeks. |
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Will the property be freehold?
Yes |
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Do I need a solicitor?
Not necessarily; the Title Company takes the place of a solicitor. |
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Do I need to open a bank account in Florida?
Yes - it's quite straightforward and takes about an hour; you need to take extra US$ or travelers cheques with you to put into the account so you can write cheques immediately. |
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How do I organise a mortgage?
Mortgages on properties in Florida are easily arranged usually up to 80% for an overseas buyer. The loan to value (maximum lending amount) is based on the lender's assessment of the area and property value based on the re-sale potential and market stability. |
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What happens once I've decided to buy?
Normally a refundable deposit of between $1,000 and $2,000 is required to reserve a property. An offer to buy is usually made through your licensed real-estate broker. On resale property there is no "subject to contract period" clause in Florida; once an offer is accepted on a property in Florida, both sides are held to a legally binding contract. Once an agreement is reached, a purchase and sale contract is prepared for signature.
An "earnest money deposit" of about 10% is normally required of the buyer at the time of exchange. If the buyer withdraws, the vendor retains the deposit. Next, the documents necessary to convey the property are drafted, a review is made by title insurers, along with a "title commitment", and a closing statement is prepared listing all financial obligations.
After the buyer transmits the funds, the documents are signed at closing (completion), and financial obligations are settled. The documents are recorded and title policies are issued following the closing. The original deeds are returned to you after being recorded at the local county court. |
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What extra charges can I expect?
If a cash purchase, you should allow aproximately 2.5% of the purchase price to cover title insurance and purchase fees. If buying with a mortgage you should allow an additional 1.5% to 2.0% to cover set-up fees. |
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What taxes and running costs can I expect?
Florida levies no personal income, gift or inheritance taxes as we know them. Instead, an ad valorem or Property Tax is assessed on the value of the property (not necessarily what was paid for it) by the local county property appraiser and collected annually by the tax collector's office. In some counties there may also be a 1% Tourist Impact Tax.
If your property is mortgaged, you would also be liable to pay for local authority Documentary Stamps which are assessed on the amount of mortgage at a rate of 0.35%, in addition to which you would have to pay an Intangible Tax of 0.2% of the mortgage amount.
Should you hold title to your Florida property in your own name (not a company), your rental and/or sale profits would only be subject to federal income tax. Income that is earned from Florida property must normally be noted on the UK purchaser's UK tax return. However, a double taxation treaty between the UK and US effectively means that the owner simply pays the higher tax rate of the two countries (normally the UK rate). Florida has an Estate Tax that ranges from 18 to 48% and may apply to your estate at your death if you own property in the US. Subject to a few exceptions, when a non-resident alien sells a US property the buyer is required to withhold 10% of the gross sales price to be paid over to the IRS as pre-payment of any CGT the seller may owe on the property.
Capital gains transferred at the time of death are not subject to tax. You will also need Homes & Hazard Insurance, and Public Liability Insurance is required if you want to rent out your house. There will probably be annual House Owners Association fees for the community you are buying into.
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How do I go about renting out my property?
If you want to rent out your home you need to make sure it's in an area zoned for rental. Generally, the best rental potential is within 15-20 minutes of Disney.
If you let your property, a state-wide 9-12% rental surcharge (which must be collected from tenants along with their rental payments and paid to the state of Florida) is levied.
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What are the investment opportunities in Florida?
Both Orlando and Daytona are the perfect locations for investment buyers, with excellent rental prospects, and property prices amongst the lowest in Florida. Generally, you get a lot more for your money in Florida than in, say, the UK. Property prices in Florida have risen significantly in the past few years (according to the Florida Association of Realtors, they increased by a massive 87% between Nov '99 and Nov '04), and were strong in 2005. 2006 saw a levelling out of prices. Visitor figures are still increasing: in 2004, there were about 44 million visitors to the Orlando area, and some parts of Florida experienced visitor growth rates up 21% per year. More high-tech companies are moving into Florida to escape the high costs of California, so the property market is likely to continue to remain strong from later this year onwards. US real-estate experts estimate that prices will continue to increase at a steady rate for the foreseeable future |
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Do I need a visa or residency permit?
If you are staying for less than 90 days you will need a full passport and a visa waiver form, which your travel agent or airline will provide. Staying in Florida longer than 90 days can be difficult to arrange. The US has over 60 different types of non-immigrant visas; for more information on US visa criteria, see the US Citizenship and Immigration Services website on www.uscis.gov. |
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How will I educate my children?
Education standards are generally high in Florida. School opening and closing times are usually 08.35 to 15.05, although some are 07.50 to 14.20. Plenty of extra-curricular programmes are offered. State law requires that all students entering Florida schools are immunized for a number of diseases. The average cost of private-school tuition, according to a 2003 Cato Institute study, is $4,689. |
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