1. Property tax
This is the most relevant recurring tax cost. The effective rate in Palm Beach County averages ~1% and can reach ~2.2% depending on the municipality. On a $300,000 property that's roughly $3,000 to $6,600 per year. It's paid whether or not the property is rented.
2. Income tax on rent
Rental income generated in the US is taxed at the federal level. The key point: you're taxed on NET income (after deductible expenses like interest, depreciation, insurance, management, repairs and property tax), not gross rent. Proper structure and bookkeeping reduce the taxable base substantially. Double-taxation treaties between the US and several LatAm/European countries prevent paying twice.
3. FIRPTA: the withholding on sale
When selling, a foreigner without a US tax structure faces FIRPTA: a 15% withholding on the sale price. It is not a final additional tax —it's an advance recovered fully or partly when you file that year's return. Planning it before you buy (for example with the right structure and an ITIN) avoids needlessly locking up capital.
4. Florida has no state income tax
Unlike states such as California or New York, Florida does not tax income at the state level. For the foreign investor this is a structural advantage: the tax burden on rent and gains is concentrated at the federal level, simplifying planning versus other US markets.
5. The LLC and structure
It's not mandatory, but investing through an LLC is often recommended for asset protection and for tax and estate-planning flexibility. The optimal structure depends on your country of residence and your goals, so it's decided case by case with a specialist. B&M Global Capital does not provide legal or tax services: we connect you with advisors specialized in foreign investors and coordinate with them.
General information for educational purposes, not tax or legal advice. Property tax rates correspond to Palm Beach County ranges; FIRPTA and federal taxation are US rules in force at the time of writing. Always verify your case with a tax specialist before investing.
Frequently asked questions
- What taxes does a foreigner pay investing in Florida?
- Mainly: annual property tax (~1%–2.2% of value), federal income tax on NET rental income, and capital gains tax when selling (with a 15% FIRPTA withholding). Florida charges no state income tax.
- What is FIRPTA?
- It's a 15% withholding on the sale price that applies to foreign sellers. It's not a final tax: it's an advance recovered fully or partly when you file. With the right structure it can be reduced or managed better.
- Should I buy through an LLC?
- Often yes, for asset protection and tax flexibility, but it depends on your country of residence and goals. It's a decision made with a tax and legal specialist; B&M doesn't provide those services directly, we connect you with experts.
- Do I have to pay taxes in my home country too?
- It depends on your country. Many LatAm and European countries have double-taxation treaties with the US that prevent paying twice on the same income. Your local tax advisor and the US specialist coordinate this.
- Does Florida charge state income tax?
- No. Florida is one of the states with no state income tax, which simplifies the foreign investor's tax planning versus other US markets.