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The Colombian Buyer's Guide To Buying Florida Real Estate

Purchasing a home in the United States as someone from another country might feel overwhelming, especially if you're unfamiliar with how the American real estate system operates.

Whether you're a newcomer to the US on visas like H1-B, L-1, etc., or an investor living outside the US, you can learn all about the process of buying property in the USA from beginning to end in this comprehensive handbook.

If you're considering buying real estate in Florida from Colombia, this guide will provide you with essential information tailored to your situation.

This blog offers a complete overview of the process for purchasing property in the United States as a Colombian buyer.

It covers everything you need to know, including key points for individuals new to the US or recent immigrants with visas, as well as non-resident foreign investors interested in acquiring property in the USA.

If you're specifically seeking to buy real estate in Florida from Colombia, this guide is tailored to provide you with the relevant details.

Is It Possible for Non-US Citizens to Purchase Real Estate in the USA?

Absolutely, non-US citizens, including those from Colombia, can indeed purchase real estate in the United States.

There are no barriers based on citizenship, which means that individuals from Colombia can buy various types of properties, such as homes for living, commercial spaces, vacation properties, and even land.

The process is clear and uncomplicated, enabling people to become property owners and enjoy the advantages of real estate ownership.

Explore this comprehensive manual to acquire knowledge about the prerequisites, step-by-step procedure, and potential tax considerations when acquiring real estate in the US as a resident of Colombia.

Model house and coins

Guidelines for Colombians Purchasing Property in Florida, USA

Colombians interested in buying real estate in Florida, USA, enjoy the same privileges as US citizens, without encountering any purchasing limitations.

However, it's important to be mindful of the following considerations:

  • Tax Identification Number (TIN) - To acquire property in the USA, Colombian buyers must obtain a Taxpayer Identification Number (TIN) from the Internal Revenue Service (IRS).

  • Financing Requirements - Colombians seeking to purchase property in the USA must secure financing through a US bank or another financial institution.

    This process may involve providing supplementary documents such as income verification, employment history, and credit history.

    Notably, a specialized mortgage program is accessible to foreigners, enabling them to obtain a mortgage even without a US credit history.

  • Down Payment - Foreign buyers, including Colombians, might be required to make a higher down payment, typically ranging from 20% to 25%.

  • Uniform Tax Treatment - Tax implications for Colombian buyers are equivalent to those for US citizens.

  • Property Options - Colombians have the liberty to purchase a primary residence or an investment property in the USA without encountering any added restrictions or consequences.

Required Documentation for Colombians Buying Property in Florida, USA

When considering a mortgage lender for your property purchase, you may be asked to furnish some or all of the following documents.

Essential Documents for Colombian Property Buyers in the USA:

  • A valid passport from your home country (Colombia),

  • A US visa or a valid driver's license,

  • Visitors with a B1/B2 visa might be requested by certain lenders,

  • For citizens of visa waiver countries, a visa may not be obligatory, and some lenders might even waive the visa requirement entirely,

  • Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN),

  • Bank statements, along with relevant financial records from your foreign bank,

  • Verification of reserves,

  • Paycheck stubs,

  • Tax return documents,

  • Credit score (if applicable).

Remarkably, even in the absence of a US credit history, you have the opportunity to secure a mortgage for your property acquisition in the US.

Steps for Colombian Buyers to Purchase a House in Florida, USA

For Colombians seeking to buy a house in Florida, USA, here's a comprehensive step-by-step guide to navigate the home-buying process:

Step 1 – Choose Your Location in the USA

You have the freedom to select your preferred location for purchasing property in the United States. This applies to both resident foreign nationals and non-US citizens.

Depending on your circumstances, consider factors like commute, community type, schools (if applicable), and nearby amenities.

Step 2 – Engage an Experienced Real Estate Agent

Partner with a knowledgeable real estate agent who specializes in international transactions. Look for an agent with a Certified International Property Specialist (CIPS) designation.

These experts are skilled in assisting foreign buyers, including those on visas, and can provide guidance throughout the process.

Step 3 – Collaborate with Your Real Estate Agent

Understand the process of working with a real estate agent in the US, which may differ from practices in your home country.

Be prepared to sign a buyer representation agreement and benefit from expert advice and support at no additional cost.

Step 4 – Comprehend Real Estate Tax Regulations

Learn about the tax implications associated with your property purchase. Resident foreign national buyers using the house as a primary residence typically have minimal tax liability.

Non-resident buyers, especially those seeking investment properties, should understand tax obligations on income and property appreciation.

Step 5 – Begin Property Search with Your Agent

Communicate your property preferences to your agent, who will assist in finding suitable options.

Your agent will guide you through the selection process, including virtual tours if necessary, and provide insights into various aspects of the properties.

Step 6 – Make an Offer and Finalize the Deal

Once you identify a property, your agent will help you make a competitive offer based on market insights. Negotiate with the seller, and upon acceptance, you're on your way to becoming a homeowner.

Step 7 – Conduct a Thorough Home Inspection

Prioritize a comprehensive home inspection to ensure the property's condition aligns with your expectations.

Your agent can recommend reputable home inspectors who will assess the property's structural integrity and systems.

Step 8 – Sign the Purchase Contract

Enter into a contract of sale with the seller, outlining terms and conditions.

Provide an Earnest Money deposit, which will be held in escrow until the property closes. Be aware of contingencies, including changes in immigration status or financing.

Step 9 – Complete a Title Report

Initiate a Title Report to verify property ownership and uncover any existing liens. This safeguards your interests and ensures a smooth transition of ownership.

Step 10 – Secure Home Financing

Explore mortgage options available to foreign nationals, even without a US credit history.

Specialized lenders offer competitive rates for immigrants and non-resident buyers, reducing the need for extensive credit building.

The duration to finalize your property purchase varies based on payment method.

With cash, you can expect ownership within approximately 30 days, while mortgage-financed purchases typically close in about 60 days.

Your real estate agent can accommodate your timeline preferences by negotiating different closing dates if necessary.

5 Mortgage Options Tailored for Colombian Buyers Purchasing Property in Florida, USA

Navigating the process of obtaining a mortgage as a foreigner can be complex, but there are tailored mortgage options available to facilitate your home purchase in Florida, USA.

Here are five mortgage options to consider:

Foreign National Mortgage

This specialized mortgage is designed specifically for newcomers like you who are looking to buy a house in the US.

Foreign nationals often face challenges in qualifying for traditional mortgages due to factors like limited US credit history and documentation of income.

Foreign national mortgage loans generally require a higher down payment (ranging from 20% to 25%) and may have slightly higher interest rates.

Despite these conditions, this option provides an appealing avenue for foreign nationals aiming to invest in US real estate.

DSCR Loan (For Investment Properties)

For those interested in investment properties, a Debt Service Coverage Ratio (DSCR) loan can be an advantageous choice.

This financing option evaluates the projected income of the property in relation to its debt obligations. It considers your ability to cover monthly loan payments based on the property's expected earnings.

While some DSCR loans require a certain credit score, there are lenders who extend DSCR loans to foreigners without US credit history, albeit with higher down payments and interest rates.

MakeFloridaYourHome can help connect you with DSCR lenders accommodating your specific needs.

ITIN Loans

ITIN loans cater to individuals possessing an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number. These loans are suitable for undocumented immigrants aiming to purchase a home in the US.

ITIN loans have unique prerequisites and offer an avenue for those lacking a Social Security number to achieve homeownership.

FHA Loan

Insured by the Federal Housing Administration (FHA), this mortgage option is designed to enhance accessibility to homeownership.

It features lower down payment requirements and more lenient credit criteria compared to conventional loans.

Foreigners with a well-established US credit history can qualify for an FHA loan by meeting the minimum credit score requirement, typically starting at 580.

Conventional Mortgage

Conforming to the guidelines of entities like Fannie Mae and Freddie Mac, a conventional mortgage entails specific lender criteria. This option necessitates a robust credit history and typically a credit score of 620 or higher.

Conventional mortgages, including FHA loans, offer favorable interest rates and down payment requirements for non-US residents with established US credit history.

If your US credit score meets the criteria, MakeFloridaYourHome can link you with lenders experienced in facilitating FHA or conventional loans for Colombian buyers, ensuring a smooth home financing experience.

Visa Requirements for Colombian Buyers Purchasing Property in Florida, USA

Understanding visa requirements is crucial for Colombian individuals seeking to buy property in Florida, USA.

Different visa statuses determine the types of mortgages you may qualify for:

Permanent Residents (Green Card Holders)

Green card holders enjoy similar privileges to US citizens when seeking mortgage options. They can potentially qualify for FHA loans, Fannie Mae loans, or Freddie Mac loans.

Some lenders may consider down payments as low as 3%, along with a requirement of at least two years of tax and work history.

Temporary Non-Resident Aliens (Work Visa Holders)

Colombian citizens with valid temporary work visas can explore FHA loans as an option.

Necessary documentation might include an Employment Authorization Document and a Social Security Number. Lenders may request proof of your ability to reside and work in the US for a minimum of three years.

Refugees and Asylees

Refugees and individuals granted asylum in the US can pursue home loans under conditions similar to those of US citizens.

Foreigners, including Colombians, have the right to buy property in the USA. You would need to present a valid Form I-94 with an "Employment Authorized" stamp or an Employment Authorization Document.

Global Investors

Global investors considering property purchase may require a B1/B2 visa, depending on the lender's policies. If you are from a visa waiver country, you might not require a visa to secure a US mortgage.

These visa-related considerations play a crucial role in determining the appropriate mortgage avenues available to Colombian buyers in Florida, ensuring a smooth and informed property acquisition process.

Tax Implications for Non-Residents Buying Property in the USA

If you are a non-US citizen considering purchasing property in the United States, it's essential to be aware of the tax consequences associated with your investment.

Here are key points to understand:

IRS Publication 515

Make sure to review IRS Publication 515, a valuable resource for non-US citizens interested in acquiring property in the USA.

This publication outlines the tax implications related to your property purchase, covering aspects like withholding taxes, capital gains taxes, and estate taxes.

Withholding Tax Rates

Non-US citizens are subject to a 30% withholding tax on their income derived from US real property. This withholding is deducted from your rental income and serves as a preliminary tax payment.

Choice of Income Treatment

You have the option to classify your income from US real property as either effectively connected with a US trade or business or not.

If you select the former, you will be taxed at rates similar to US citizens. If you opt for the latter, your income will be subject to the 30% withholding tax.

Election Options

Two key elections can impact how your US real property income is taxed:

  • Net Election - This choice involves deducting allowable expenses like mortgage interest, property taxes, and repairs from your rental income. The remaining net income is then taxed at your regular income tax rate.

  • Gross Election - Here, no deductions are made from your rental income. The entire gross income is subject to the 30% withholding tax.

Tax Treaties

If a tax treaty exists between your country and the United States, you might qualify for a reduced withholding tax rate. For detailed information, refer to IRS Publication 515.

Capital Gains Tax

When you, as a non-US citizen, sell your US real property, you will be liable for capital gains tax on the sale. The capital gains tax rate is generally 15% for most taxpayers.

Withholding Tax on Sale

Upon selling your US property, the buyer is obligated to withhold 10% of the sales price and remit it to the IRS. This withholding tax can potentially be reduced or waived by making an election under IRC 897(I).

State Property Tax

Depending on the state where your property is located, you might be subject to state property tax. The exact amount of tax will vary based on the specific state regulations.

Form 1040NR

If you earn income from US real estate property, you are required to file a US tax return using Form 1040NR.

Being well-informed about these tax considerations will empower you to make confident decisions regarding your property investment in the United States.

For comprehensive guidance, refer to IRS Publication 515 and consult with tax professionals to ensure compliance and effective tax planning.

What Kinds of Real Estate Can Colombians Buy in Florida, USA?

  • Homes for living, like single-family houses, townhomes, condos, and apartments.

  • Properties for investment, such as rental homes, multi-unit buildings, and commercial spaces.

  • Second homes or vacation properties for personal enjoyment.

  • Land or empty lots for future development or investment.

  • Upscale options like luxury homes and estates.

  • Agricultural lands, farms, or ranches.

  • Warehouses or industrial properties.

  • Blended spaces with both homes and businesses.

  • Properties tailored for specific needs, like hotels, resorts, or healthcare facilities.

With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.

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