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Dear investor, Further to your enquiry, we will try to outline your UK and US tax position, in relation to your proposed purchase/investment in Florida, based on our own villa investment experience. As a UK citizen, you are required to report your "world-wide income" to the UK Inland Revenue, however, there is a US/UK tax treaty, which eliminates any "double taxation" between the two countries. You are eligible to receive a credit for taxes paid to the United States. Most Non-resident Returns for rental property show a loss, and therefore, no income tax is owed. If you were to sell your property,as a non-resident alien, the IRS has no authority to collect US tax once you have left the US (i.e. sold your holiday home). To ensure collection of any tax that may be due, the IRS require the withholding agent (i.e. usually a Title Company) to withold 10% of the gross sale price from the sellers proceeds. However, due to depreciation, mortgage interest and other expenses, your rental property will probably have generated a tax loss when being rented. These losses are accumulated and carried forward, to reduce future income or gain from the sale of the property. Generally, gain from the sale of long-term capital assets is subject to a maximum capital gains tax rate of 20%. However, a maximum 25% rate is imposed on long-term capital gain attributable to certain prior depreciation that had been claimed on real property. There are other State and local filings that you are required to make :- 1) The county tax authorities calculate real property taxes. Values are assessed annually and the assessment notice will be sent to you (or your mortgage holder if you deposit your taxes monthly with them) in November. You or your mortgage holder must then return the notice with payment. 2) If you purchase a house that contains furniture or other personal property that is not attached to the house, Form DR-405, Tangible Personal Property tax return will need to be filed annually on your behalf. The return, detailing any personal property contained in the rental house, is filed with the county in which your property is located. 3) If you rent your property for periods less than six months you will be required to collect and pay sales tax to the State of Florida via the Department of Revenue, on transient rentals. In addition to the applicable six per cent sales tax (seven per cent on properties located in Osecola, Collier and Polk counties), a four per cent (five per cent on properties located in Osecola, Collier and Polk counties) tourist development tax must also be collected and paid monthly to the county in which your property is located. Please note that sales tax and tourist development tax must be collected on all rental income from properties located in Florida regardless of where the rent is collected. Rental periods longer than six months are not subject to these taxes. We hope you find the above informative and if we can be of further assistance please do not hesitate to contact us on the number below, Best
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