1. Ownership and Liability

• Individual: The person is the legal owner and personally liable for debts or legal issues.
• Company: The company owns the property, offering limited liability—personal assets are protected from business risks.

2. Taxation on Rental Income

• Individual: Rental income is taxed based on personal income tax rates, which can be high for top earners.
• Company: Rental profits are taxed at the corporate tax rate, often lower than personal rates, especially for high-income individuals.

3. Mortgage Interest Deduction

• Individual: Limited to a 20% tax credit on mortgage interest.
• Company: Can fully deduct mortgage interest as a business expense, which can significantly reduce taxable profits.

4. Capital Gains Tax

• Individual: Subject to personal capital gains tax rates, with some allowances.
• Company: Pays a flat corporate tax rate on gains, but may face double taxation if profits are distributed as dividends.

5. Succession and Estate Planning

• Individual: Property transfer may trigger inheritance tax and legal complexities.
• Company: Shares in the company can be transferred more flexibly, allowing strategic estate planning and easier generational wealth transfer.

Ready to Buy or Sell in Miami’s Fastest-Growing Market?
Whether you’re searching for a luxury new development or looking to sell your property at the right moment, Jester Niño Real Estate offers strategic guidance, market insight, and personalized support to help you make your next move with confidence.

Jester Niño
Broker Associate
C5 | EXP Realty

Who does FIRPTA affect?

FIRPTA affects all non resident aliens and foreign companies not considered to be American corporations. From a taxation (tax return) standpoint, when a person who doesn’t live in the United States or when a foreign corporation sells a property in the United States, they shall be subject to FIRPTA provisions.

How does it affect buyers and sellers?

At the time of closing, buyers are required to withhold 10% of the sales price in transactions valued below $1,000,000 and 15% of the sales price in transactions valued above $1,000,000. For example, a foreign investor sells a property for $350,000 (USD). The closing agent of the transaction (the company or lawyer that processes the title deed) will retain $35,000 (USD) in a special escrow account, until the foreign investor presents their federal income tax return in January of the next calendar year following the closing of the sale.

What is the difference between “withholding tax” and “tax?”

Withholding tax is the mechanism whereby the IRS forces the foreign individual or company to submit their tax return to determine if a profit or a loss resulted from the transaction.

Once the tax return is submitted and the IRS determines the amount to be charged as tax, the difference between the withholding tax and the tax is returned to the seller.

Can this withholding be avoided?

It’s very important to properly plan this out to avoid negative surprises at closing.

Buying in your own name or through a company is one of the most important elements in the application of FIRPTA. However, the type of legal structure and the internal makeup could make a difference. On the other hand, FIRPTA is only one of the factors that should be taken into consideration, so it’s extremely important you know the advantages and disadvantages of the different purchasing structures (LLC, S Corp, Trust, Corporation, etc.).

How does it affect the buyer?

As a buyer, you should make sure the withholding tax is implemented in case the seller is a non resident alien or a foreign company not considered a U.S. corporation. If you don’t make sure it’s implemented, you may be responsible for paying the taxes.

On the other hand, as a buyer, it’s important to make sure you create the most effective purchasing structure to deal with this withholding tax for a future sale.

LEGAL NOTICE:

The provisions of FIRPTA are complicated and require the expertise of a real estate lawyer or public accountant. They can fill out the proper forms and evaluate the possible implications. The information provided herein should not be considered a source of legal or financial advice. Please contact a professional in your area to receive information and guidance that applies to your individual situation.

Ready to Buy or Sell in Miami’s Fastest-Growing Market?
Whether you’re searching for a luxury new development or looking to sell your property at the right moment, Jester Niño Real Estate offers strategic guidance, market insight, and personalized support to help you make your next move with confidence.

Jester Niño
Broker Associate
C5 | EXP Realty

1. Financial Protection Against Unexpected Events

• Covers damage from fire, storms, theft, vandalism, and more.
• Helps you avoid massive out-of-pocket expenses for repairs or replacements.

2. Coverage for the Physical Structure

• Protects the building itself—walls, roof, foundation, and attached structures like garages.
• Ensures you can rebuild or restore your property after a covered event.

3. Protection for Personal Belongings

• Includes coverage for valuables like furniture, electronics, and clothing.
• Offers reimbursement if items are stolen or damaged.

4. Liability Coverage

• Shields you from legal and medical costs if someone is injured on your property.
• Especially useful for landlords or homeowners who host guests.

5. Peace of Mind

• Knowing your property is protected lets you live or invest with confidence.
• Reduces stress about potential disasters or accidents.

Ready to Buy or Sell in Miami’s Fastest-Growing Market?
Whether you’re searching for a luxury new development or looking to sell your property at the right moment, Jester Niño Real Estate offers strategic guidance, market insight, and personalized support to help you make your next move with confidence.

Jester Niño
Broker Associate
C5 | EXP Realty

1. Find the answers to the following questions:

• The three main reasons you are moving.
• Realistically, the price you expect to set for the sale of the property.
• How much money you expect to receive from the sale of your home after all cost are deducted from the sale (e.g., commissions, closing costs, etc.).
• How much money you need to pay off the mortgage in full.
• Your exact budget for purchasing a new property.
• The time it will take you to carry out these activities.

A knowledgeable real estate agent should be able to help you find the answer to each of these questions.

2.Determine the realistic price of your home. A common mistake sellers make is estimating the value of the property based on their neighbors’ asking price, (i.e. a property that has not sold yet). The real estate consultant should supply comparable prices based on the properties that sold in the last three to six months.

3. Get your property in the best condition possible. Make sure to take the appropriate actions before putting your home on the market to increase the chances of selling the property quickly, and at the best price.

4. Financial decisions prior to selling your home:

• Contingency provision. If you intend to buy another house, and need the money from the sale of your current property to do so, include a contingency in the offer. In other words, specify in the contract that the purchase of the new house depends on the sale of your current property. If you can’t sell your home for any reason, you will not be obliged to buy the other property.
• Financing. Make sure that you are eligible for a loan if you’re going to buy another property.
• Pricing. Sell the house at a reasonable market value. Don’t waste time offering it at a higher price than the market would pay. You’ll only help your neighbor sell his property faster by doing so!

5. Hiring a real estate agent. If you’re going to sell your property with a real estate agent, be sure to have:

• A clear and precise agreement regarding compensation for their service.
• Defined marketing strategy.
• Structured list of responsibilities and duties (open houses, showing times, offer negotiation, marketing expenses, etc.).

6. Items to sell. Have a list of the articles you want to sell and a list of the items you do not want to sell. There are two reasons for making this list. First, the buyer can assume there are items included in the sale, such as curtains, lamps, or fixed furniture. To avoid complications that could delay the sale, specify what is excluded and what is not included in the sale. Second, the buyer may be willing to buy some items in your house, like paintings, lamps, curtains or furniture. You’ll make a more objective decision on what you want to keep and what the value of the goods are if you think about it beforehand. That way, you won’t make rash decisions because you’re pressured by the sale of the property.

Ready to Buy or Sell in Miami’s Fastest-Growing Market?
Whether you’re searching for a luxury new development or looking to sell your property at the right moment, Jester Niño Real Estate offers strategic guidance, market insight, and personalized support to help you make your next move with confidence.

Jester Niño
Broker Associate
C5 | EXP Realty