The Most Versatile and Beneficial way for Canadian Citizens to hold Title to Real Estate in the State of Florida TITLE CONCERNS. Transferring funds to purchase a home or condominium is a simple process for Canadian buyers, however, many foreign buyers often overlook the consequences of their purchase. The acquisition of U.S. real estate by a Canadian citizens poses significant issues including but not limited to U.S. estate tax, capital gains tax, incapacity issues, complex Florida probate rules and creditor protection issues. Proper cross-border planning for Canadian Citizens must address all of these issues. A deep analysis is required to find the best solution. There is no simple answer or one size fits all. However, as a general rule, the vast majority of concerns can best be addressed by creating and taking title in a Canadian Florida Land Trust which is considerably more advantageous then owning property in a buyer’s individual or corporate name or even a Canadian Trust.

FIRPTA ia an acronym for the Foreign Investment Real Property Tax Act. It’s purpose is to assure that capital gain, if any, is paid before funds can be removed outside the taxing jurisdiction of the United States. As a matter of law, 10% of the gross sales price must be withheld by the purchaser of property acquired from a foreign person, unless there is an exemption from the tax. When applicable, FIRPTA withholding tax is paid directly to the I.R.S. within 20 days of the real estate transfer unless a withholding certificate is applied for prior to or up until the date of closing.

The Seven Essentials Every Seller Should Know

The payment of income or capital gain tax on the sale of property can be voluntary thanks to Section 1031 of the Internal Revenue Code which is one of the most underutilized sections of the tax code. Perhaps the problem lies with calling the procedure an exchange as this creates a lot of misunderstanding and would be better utilized if this was re-labeled as a 1031 rollover because that is precisely what happens. The gain is rolled over to a new property. There are an unlimited number of times an individual can successfully rollover gain and postpone tax. The ultimate goal is to make this tax disappear by one of two ways:

Florida Land Trusts are simple to create and are an excellent planning tool for residents and non residents alike. In fact, I submit they are the best solution for foreign buyers. One reason they are seldom used is that few people are familiar with Florida Land Trusts including Realtors, title companies and ironically many attorneys. Most states do not have a land trust statue. In fact, only Florida and Illinois are the exception. Initially, land trusts limited trustees of a land trust to banks or specifically licensed trust companies. Subsequently, the Florida legislature, expanded this role to individuals, corporations, partnerships and Limited Liability Companies. Furthermore, anyone can be the beneficiary and owner of the land trust.

Quite often Capital Gains tax is due on sale and transfer of a real property. In 1997 tax laws were substantially modified to provide a number of measures to allow individuals to keep more of the profits earned when a sale occurs.

Capital Gain defined
Gain is defined by taking the net closing proceeds and subtracting the "basis" of the property consisting of the actual price altogether with closing cost and captital improvements which enhance or extended the life of the property.

Rate reduction
Effective May, 2003 provided property is held 12 months or longer the rate was reduced to 15% for all investors and second home owners.

Sale of personal residence

Few people are really aware of how proper estate planning can minimize the bite that federal estate taxes and state inheritance taxes take from their estates. Everyone should be reasonably knowledgeable of the federal estate tax and the state inheritance tax; people need to know how to minimize these taxes and, where appropriate, how to eliminate these taxes altogether. In addition, people should be aware of when their estate will be subject to estate and inheritance taxes and how much of their estates will be affected. Estate planning should then provide an appropriate means of having the needed liquidity to pay those taxes without selling major assets.