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FOREIGN INVESTORS IN REAL ESTATE AND THE EB-5 VISA

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The Miami Association of Realtors ranked Brazilians as the “top foreign consumer searching Miami properties in May 2013”.   Source:  Miami Association of Realtors, The Miami Herald  Sunday, July 7, 2013. Next in line were Canada, Colombia and Venezuela.  What this equates to is a large number of foreigners investing in Miami Real Estate and depleting inventory of homes in South Florida.

While the majority of foreigners are smart enough to hire real estate lawyers to assist them with their purchases, far too many fail to do so and this failure to plan can result in costly mistakes.  So how do foreigners avoid the pitfalls of foreign investing in the United States?  First, it is important to understand who is considered a foreigner.  A foreigner is any person that is neither a citizen nor a green card holder in the United States.

For a foreign buyer, there are no special rules or regulations that must be carried out to purchase property.  They simply put in a contract, produce the funds and close.   If rent is collected, they must file income tax returns, a 1040NR, to declare the income and expenses as well a pay any applicable income tax.

The implications arrive at the time the foreigner is ready to sell!  Foreign nationals that sell real estate in the United States face heavy tax implications and are subject to FIRPTA.  If there was no legal guidance prior to buying, then there is little that a lawyer or tax professional can do to safeguard the foreigner.  The damage is done.

However, with the assistance of a real estate lawyer and accountant, and a little planning, many of the taxes can be avoided entirely.  As a real estate and business lawyer, as well as an accountant, I see it far too often. The closing takes place and a year later, when its time to sell, the damage is done.  At this point, shock takes over when these foreign sellers are told what they will have to pay the Internal Revenue Service.”  -Jacqueline A. Salcines, Esq., Attorney at Law, Accountant.  Therefore, the smart and savvy investor will hire an attorney to lay the foundation to structure the investment so as to avoid taxes and penalties.

The following are just a few of the items we can provide advice on that foreigners should consider prior to investing:

  1. How to take title –   As a foreign investor without either U.S. Citizenship status or residency status, foreign property buyers face quite a hefty tax upon the sale of their property. This can be avoided by either purchasing in the name of an LLC or structuring the purchase in a different manner.  While the capital gain is may only be taxed at 15%, if the foreigner dies while owning the real estate, the entire value in excess of $60,000 may be taxed at rates as high as  45%.
  2. FIRPTA Considerations.  The Foreign Investment Real Property Tax Act also requires settlement and closing agents to withhold 10% of the gross sale proceeds of foreigner, held at the time of closing,  and send to the Internal Revenue Service.  This insures that the IRS collects an amount if the foreign property owner fails to file an income tax return.  Properties under $300,000 may be exempt altogether if certain conditions are met
  3. EB-5 Visa.  The EB-5 category was created by Congress in the Immigration Act of 1990 to encourage the flow of foreign capitalStacks of One Hundred Dollar Bills with Small House. into the United States in order to create jobs for U.S. workers.  Under this Visa, the foreigner that invests a minimum of $500,000.00 can immediately obtain green cards for himself and his immediate qualifying family members.  This is also a consideration that foreigners can consider.

Although there are many rules and regulations to consider when purchasing and disposing of real property by foreigners in the United States, they do not have to be confusing.  Whether you are buying or selling, consult with a real estate lawyer and tax professional to ensure that you do not make any mistakes, and your investment is a sound one.

At the Law Offices of Jacqueline A. Salcines, PA, attorney Jacqueline A. Salcines is both a real estate lawyer, investment consultant, as well as an Accountant.  We stand able to assist foreigners to navigate the maze of foreign investing.  Call us today for a free consultation, or email us with any questions you may have. J.Salcines@salcineslaw.com

Jacqueline A. Salcines, Esq.

305  |   669    |   5280

TRUST    |    COMMITMENT    |  RESULTS

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2013 MAY BE THE BEST YEAR TO BUY A HOME

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foreclosure process 2013 MAY BE THE BEST YEAR TO BUY A HOME

Aside from mortgage interest rates being at the lowest in almost 30 years, and home prices still well below what they were 6 years ago (although positively climbing…good for sellers, bad for investors) numerous elements of the fiscal cliff bill favor buyers and sellers alike.  This may mean 2013 is the best time to buy a home.

After consistent declines last year in interest rates, the start of 2013 marked another drastic dip in rates, according to Freddie Mac’s Primary Mortgage Market Survey.  The average 30-year fixed rates in January 2013 was 3.34, down form 3.35 at the end of 2012, and well below 3.90 at the beginning of 2012.  15-year fixed averages slid below 2.65, down from 3.23 exactly a year ago.

Lenders have also finally faced the  cold hard facts (it took them long enough)!  They have finally realized that it is much more profitable to accept a short sale then take a harder hit through a foreclosure.  Bank statistics show they lose about 20 percent in a foreclosure sale compared to 14 percent in a short sale, according to the National Association of Realtors data.

For this reasons, banks are not only approving short sales in record time (my firm is seeing between 45 to 50 day approvals) but are giving homeowners, buyers and even tenants money incentives to sell and close the short sale.  Attorney Jacqueline Salcines states “As recently as December 2012, my client received a $26,000.00 incentive, $20,000 from his lender and $6,000 from the HAFA program, AND, wrote off his mortgage balance.  This translates into an overwhelming incentive and gift to the borrower that is selling.”  This is good news for sellers selling and the buyer/investors still looking for a good deal.

While experts such as Zillow.com predict that home prices will increase about 3.1 percent in 2013, which is great for sellers and their realtors, there is still lots and lots of good news for buyers.  New home buyer incentives have been reinitiated giving first time home buyers credits to buy again.

All in all, whether you are buying or selling, it makes no sense to go it alone.  Consult with an attorney who is qualified to provide solid advice in the field of real estate home purchases and investments.

REACH ME ANYTIME BY CALLING  305 | 669 | 5280  OR WRITE ME  J.SALCINES@SALCINESLAW.COM

 

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NEW MORTGAGE RULES IN 2013 WILL AFFECT HOMEBUYERS AND MAKE OBTAINING A MORTGAGE MORE DIFFICULT

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foreclosure_defense NEW MORTGAGE RULES IN 2013 WILL IMPACT BORROWERS

Last week, the Consumer Financial Protection Bureau announced new rules, known as the Qualified Mortgage (or QM for short), for mortgage financing. This new regulation, while creating a safer harbor for the lenders, reducing their risks, drastically impacts homebuyers and their ability to obtain loans.

At the start of 2013, lenders will face stricter guidelines in getting their loans approved. This translates into additional safeguards, additional manpower, additional fees and costs to borrowers. The rules will require tighter qualify control requirements for lenders including full documentation of applicant’s income, assets, employment, credit history, etc.

Plus, the Dodd-Frank Law in effect, limits points for qualified mortgages at 3 percent of the loan. This could heavily impact large lenders and home builders who provide incentives for home owners and use affiliated companies for their services, such as appraisers, title and surveyors.
Also affected are jumbo mortgages, which could affect higher end home sales in Counties and Cities with higher sales figures such as Coral Gables, Miami-Dade and Palm Beach. Jumbo loan limits in Florida counties are classified as follows:

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Under the new regulations, to achieve safe harbor status, a loan must not have a debt-to-income ratio in excess of 43%. David Stevens, Chairman and President of the Mortgage Bankers Association estimates that “between 22 and 25 percent of all jumbo loans that exceed those limits, have DTI’s beyone that cap” thereby they will be affected.

To read more on this go to:

http://www.inman.com/buyers-sellers/columnists/kenharney/new-mortgage-rules-could-crimp-lending

So, a few tips to make financing your home easier and allowing you to escape this bureacacy:

● Preserve your credit and keep your credit scores high
● Put down at least a 20% down payment on your purchase
● Avoid PMI mortgage insurance
● Use a qualified mortgage banker or broker to find the best possible programs and loans
out there for you based on your particular situation.

And the best advice of all… don’t go it alone.

Hire a qualified attorney to handle your closing! By hiring an attorney and accountant, you pay no more than a title company would charge BUT get additional services from a qualified professional including

● Review of Good Faith Estimates provided by mortgage brokers to check fees and costs

● Review and examination of title on the home you are purchasing to make sure title is free and clear of all encumbrances
● Preparation of the Closing Statement HUD-1 to make sure all charges are accurate
● Attendance at closing and review of all lender documents including mortgage and note

Contact me for more information on our real estate closing services.

Jacqueline A. Salcines, Esq. 305|669|5280

Or email me directly at J.Salcines@salcineslaw.com

HAPPY BUYING!!

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