Buying Property in Florida and the US - The FAQs

Is purchasing a property in Florida a sound investment?

Providing that you purchase the correct type of property, in a location that is suitable, real estate in Florida is one of the best investments currently available anywhere in the world.

How easy is it to purchase a home in Florida?

Purchasing a home anywhere in the continental USA, is in general terms, far less complicated than virtually any other country in the world. Florida is very much a "user friendly state" giving the buyer an extremely easy and safe approach to home ownership.

Will the Property Abroad Group show me the best property in Florida and not just new developments they get the best commission with?

This is a concern shared by many prospective purchasers. The best possible assurance you can have is to ensure that you select a company that is totally independent and can therefore offer you impartial and unbiased advice on every aspect of property purchase and management.

How much deposit do I require to reserve property?

In most instances, a deposit of just $1000 will be sufficient to reserve a property and fix the price.

Is it easy to obtain a mortgage in Florida?

Obtaining a mortgage in Florida is relatively straightforward. Loans of up to 90% are available for residents and non-residents, and are secured against the Florida property. The majority of resident loans are made at 80% of the purchase price to avoid private mortgage insurance, and the majority of non-resident loans at 75% as these offers the best terms, especially for our overseas buyers. Repayment terms range from 5 to 30 years with no age restrictions.

What about the Taxes?

You will be pleased to learn that there are no sales taxes (VAT) on either the purchase or the sale of Property in Florida. The price you pay for the house is the total price. However, there are "closing costs" when both selling and buying.

Included as part of the "closing costs" you will have the following taxes..:

If you are buying a property with a mortgage, then you will pay to the State of Florida Documentary Stamps on the amount of the mortgage at the rate of 35 cents for each $ 100 of mortgage.

You will also pay an Intangible Tax at the rate of 2 mills (.002) on the mortgage amount. For example, if you have a $ 100,000 mortgage, you would pay $ 350 Documentary Stamps and $ 200 Intangible Tax. If you are paying cash for the property, then you have none of these taxes.

When selling you have to the State of Florida Documentary Stamps on the Deed, which is the full amount of the selling price, at the rate of 70 cents per $ 100. For example, on a $ 150,000 house, you would pay $ 1,050. This property tax is paid annually on the assessed value of your property (which is usually around 75% or so of the actual market value of the property).

The amount of taxes varies greatly with each neighbourhood and depends on facilities and schools in that neighbourhood, but an average amount for property taxes on a $ 150,000 house would be somewhere around $ 2,000.

In addition to the above-mentioned Doc Stamps, Legal Costs and Title Insurance, there will be small recording fees to record the mortgage and the deed. Buyers will need an appraisal to verify that the value of the property is indeed at least as much as they are paying (if obtaining a mortgage, the lender will require that). This is usually around $300.

Also, a termite inspection has to be done to check there is no infestation of termites, usually around $65. Lenders also will require a survey (around $300) and charge around $60 to obtain a credit report on the Borrower and there will be fees from the Lender and Mortgage Broker to issue a mortgage, but these fees vary greatly.

You can usually estimate about 2% for closing costs as a Seller (in addition to Real Estate Broker commissions of around 6%) and 2.5% - 3.% if you are a Buyer with a mortgage.

The only other taxes you would pay would be taxes on any profits when you sell your property, but your Accountant would be able to help you with that. A non-resident alien is usually subject to withholding tax here in the USA, which he then would most likely be able to claim back as a Foreign Tax Credit on his UK tax return.

What Protection Do I have Buying Property in the USA?

A Buyer can usually be pretty well assured that there will be no surprises in the future. There is great amount of protection for Florida property owners, probably more so than many other countries.

In the State of Florida all the legalities are taken care of by Title Companies, which are used to doing thousands of transactions, most of which are standard.

They charge a set fee of only around $ 150 to $ 300, depending on what has to be done. The most expensive part of this whole process is the issuing of Title Insurance, which basically protects the property owner (and the lender, if there is a mortgage) from any defects on the title. Most people will be unfamiliar with the concept of Title Insurance, but it is a system that has been in use in the States for years. Title insurance can be as much as 1% of the property value, but there is a move currently to be very flexible on that.

What about Visas?

Visas are needed for UK citizens to enter the USA as tourists and the length of stay allowed is three months. You can apply for an extension to six months.

I understand that there is certain rental restrictions in Florida- is this true?

Yes, due to the fact that Florida attracts so many families from the northern states, Canada and overseas, that spend only part of the year within its borders, there are many restrictions as to where and when short- term rentals are permitted. For instance, the four counties that make up the majority of greater Orlando each have different rules relating to the letting of homes on a short-term basis. On the Gulf and Atlantic coast the restrictions are extremely complicated and specific. It is therefore essential to obtain correct professional advice and guidance as to the suitability of a particular community. We will ensure that the property you select is completely free from any such restrictions and is legally zoned.

How many weeks do I need to rent my home to cover all of the running costs?

This is dependent on the type of property chosen, the location and the amount and term of the mortgage. As a general guide, if you secure up to a 75% mortgage you will need to rent out your home for about 35 weeks per annum to break even on an average sized four-bedroom villa. If a fairly large home is selected it only takes another two or three weeks to cover the difference in out goings. A normal year of bookings will provide 21K-25K per year in rental income on a 4 to 5 bedroom home.

If I am purchasing a second home or "holiday" home that I intend to rent out, to what standards should I furnish the home?

Most of the builders deliver a complete package including all the furnishings, kitchenware and linens. Very few clients upgrade the standard furniture packages, as they are so comprehensive and attractive. For the builders that do not handle furniture, our interior designers will be pleased to show you several examples of furniture packages that provide excellent value for money.

So how do I know which management company to appoint?

Appointing a professional management company to manage and maintain your home in your absence is vital. If you intend to rent out your property, it is also important to use the services of a company that will provide you with high levels of occupancy throughout the year, ensuring that you obtain the best possible returns. We provide our owners with a comprehensive, professional and totally reliable service.

Am I covered by insurance in the event of damage to my property?

We help our clients obtain the most comprehensive policies from several of the nation's leading underwriters. If you are letting your home, the management company should also make provision to obtain a security deposit from each group of guests on their arrival to cover all accidental breakages.

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