FREQUENTLY ASKED QUESTIONS
We explain everything you need to know.
PROCESSING AND DOCUMENTS:
What is EIN?
An Employer Identification Number (EIN) is assigned by the Internal Revenue Service (IRS) to companies for tax purposes and filing. We can carry out this processing for you.
What is ITIN?
An Individual Taxpayer Identification Number (ITIN) is a tax processing number for individuals issued by the IRS and required for foreigners who want to do business in the United States. We can carry out this processing for you.
What is FIRPTA?
Foreign Investment in Real Property Tax Act (FIRPTA) is the disposition of the U.S. Federal Government, which applies to properties sold by U.S. non-resident individuals, which the IRS requires a 10% withholding in the sale of a property until the foreign seller files their tax return. Sales under $300,000 are exempt from withholding, provided the buyer acquires the property as a personal residence. We can carry out this processing for you.
What is HUD-1?
The HUD-1 Settlement Statement is a standard form in use in the United States to itemize services and fees charged and paid in the purchase and sale of a property. The parties have the right to inspect the HUD-1 a day before the closing. The form is prepared by the intervening Title Company. Since 2010, the HUD-1 closing statement also contains, in case of mortgages, what is known as a good faith estimate by the intervening bank.
What is a Warranty Deed?
It is the Warranty Transfer Certificate of a property recorded in the Public Registry, which represents the Deed of the Property. In the U.S.A. there are no Property Deeds as we know them and this document of only two pages, duly signed and with the seal of its recording in the registry, constitutes the Title Deed.
How do I verify if my Title is recorded?
All Property Titles are public records and their recording can be verified by visiting this link: https://www2.miami-dadeclerk.com/public-records/Search.aspx
What is Title Insurance?
It is the insurance that covers the risks derived from flaws or defects that may be contained in property titles, recorded or not in a public registry of property, that may cause damages to the insured. The coverage is permanent while the insured or their successors maintain an interest in the property.
How do I verify the Property Taxes of a Property?
You can verify the amount and status of the debt of Property Taxes by visiting this link: https://www.miamidade.county-taxes.com/public
What do I need to open a bank account in the name of my company?
The following is required to open a bank account:
- Articles of Incorporation or Organization.
- EIN
- Identity Card (i.e., a driver’s license, passport, etc.).
COMPANIES:
How many members are required to open a company?
You can open the company with a single member or more.
Can a U.S. non-resident be a member of a company in the United States?
Non-resident individuals can form a Corporation or an LLC; they only need to have an address in the United States. We can establish a legal address for you.
Can a company be the owner of another company?
A company can be the owner of another corporation or an LLC.
In addition to individuals, can offshore companies de members of a company?
Yes, both individuals as well as local or foreign legal entities can be members. Foreigners can also invest directly or through offshore companies.
What is an Operating Agreement?
An Agreement among members to operate the company, which represents the Bylaws of the company.
What are my obligations every year once the company is formed?
Each year, both the State of Florida and Delaware require the renewal of your company and the filing of a federal tax return, even if your company has had no activity.
What if I do not renew my company annually?
The State will deem your company as inactive and a fine must be paid to reactivate it.
What should I do with my company once I have sold the property or properties?
If you are not going to continue operating the company after selling all its assets, it is necessary to settle the company’s accounts and proceed to close it. Until the company is closed, your obligations shall remain in force and not fulfilling them will expose you to fines.
TAXES:
I am a foreigner and I file my personal taxes in the United States. Do I have to report my income from other countries?
No, if you do not reside in the United States for more than 180 days in the year, you do not have to report your income from other countries.
When is the best time regarding tax optimization of investment to sell a property?
The ideal period is one year after the start of the business (date of deed), since there is currently a benefit of a 15% fixed rate on profits.
How much federal tax do I have to pay for my C Corporation (Inc. / Corp.)?
How much federal tax do I have to pay for my LLC?
An LLC is not taxed at a corporate level; LLC members are taxed at a personal level. The company liquidates and distributes losses or gains among the members, who at a personal level pay their taxes.
What is a Schedule K-1?
A tax document delivered by an LLC to each one of its members, with the liquidation of the portion of tax they must include in their individual tax returns.
How much federal tax do I have to pay as an individual?
If a foreign company fully owns my LLC, how much federal tax do I have to pay?
In this case, it is convenient that your LLC requests authorization to pay taxes as a C Corporation, and let the company be the one liquidating and paying taxes in the United States.
EXPENSES AND PROFESSIONAL FEES:
What percentage of the price do the purchasing costs represent?
The closing costs in a purchase with no mortgage are approximately less than 2% of the price; this cost increases by 1.75% (Developer fee), if the purchase is made from a Developer and not an individual; in addition to this, the cost is 1.5% more if there is a mortgage.
What percentage of the price do the selling costs represent?
The closing costs for the seller are approximately 0.8% of the sale price; mainly due to the costs of seals. Also, keep in mind that a proportional part of the Property Taxes corresponding to the months of the year in which you have been the owner will be withheld.
How much commission should I pay for buying a property?
In the Unites States, you should not pay any real estate commission as a buyer or as a tenant. Total brokerage fees are the responsibility of the seller or owner.
How much commission should I pay for selling a property?
When selling your property, the usual and market norm is to pay a 6% commission of the sale price, which will be shared between the parties involved.
How much commission should I pay for annual rental agreements?
When renting your property, the usual and market norm is to pay a 10% commission of the total rental agreement amount. That is, if the monthly rent is $1,500, you will pay $1,500 x 12 x 10%.
How much commission should I pay for temporary rental agreements?
When renting your property temporarily, the usual and market norm is to pay a 20% commission of the total rental agreement amount. Also, keep in mind that in this type of short-term rental for less than six months, you may be subject to pay local fees and taxes (tax on short-term rentals).