A foreign owner of Florida property faces tax at three distinct moments: while holding it, on the income it produces, and when selling. Florida levies no state income tax, but federal tax applies in full, and one exposure catches most foreign buyers unprepared — the US estate tax, where a non-resident's exemption is a fraction of a US citizen's.
Which taxes actually apply?
While holding: county property tax, billed annually on assessed value.
On rental income: federal income tax, under one of two regimes.
On sale: capital gains tax, with FIRPTA withholding collected at closing.
On death: US federal estate tax on US-situs assets.
Property tax in Florida
Property tax is set at county level and billed on the assessed value of the home. Rates vary by county and by the taxing districts a property sits in, so two homes of the same price in different counties can carry materially different annual bills.
The Homestead Exemption, which reduces the taxable base and caps annual assessment increases for Florida residents, does not apply to a non-resident investment property. Budget for the full assessment.
Tax on rental income
Rental income earned by a foreign person is taxable in the United States, and there are two regimes.
The default is a flat 30% withholding on gross rent, with no deductions. The alternative is to elect, formally, to treat the income as effectively connected with a US trade or business — which taxes the net profit at graduated rates and allows deduction of mortgage interest, property tax, insurance, management, repairs and depreciation.
For a leveraged property, the net election usually produces a substantially lower bill, sometimes zero in early years once depreciation is applied. The election is not automatic; it must be made.
Not making the net election and paying 30% on gross rent is one of the most expensive avoidable mistakes a foreign landlord makes. It is a filing decision, not a structuring one.
FIRPTA: what happens when you sell
Under the Foreign Investment in Real Property Tax Act, the buyer is required to withhold a percentage of the amount realized on a purchase from a foreign seller and remit it to the IRS. The standard rate is generally 15% of the gross sale price — not of the gain.
That distinction matters. A seller who breaks even, or sells at a loss, still has the withholding taken. It is an advance against the final tax, reconciled on the return, and refundable to the extent it exceeds what is owed.
Reductions exist. Where the buyer will use the property as a residence, a lower rate generally applies in the price band above US$ 300,000 and up to US$ 1 million, and withholding is generally not required on qualifying residential sales at or below US$ 300,000. The precise boundaries are statutory and the sources that summarise them do not always agree — confirm the applicable rate for your transaction before closing.
Form 8288-B allows application for reduced or eliminated withholding where the actual tax owed will be lower. It must be filed before or at closing to be useful.
The exposure almost nobody mentions: estate tax
A US citizen or resident has a federal estate tax exemption in the millions. A non-resident alien holding US-situs assets — and US real property is US-situs — has a far smaller one, historically US$ 60,000, with rates above that reaching into the 40% band.
In practice this means that a foreign individual holding a US$ 500,000 Florida home in their own name can leave their heirs facing a substantial US estate tax bill on an asset they have not sold. This is the single strongest argument for considering an ownership structure rather than personal title, and it is routinely omitted from sales material.
Structures have costs and consequences of their own, in the US and in the owner's home country. This is the point at which a cross-border CPA stops being optional.
What Florida does not tax
Florida imposes no state personal income tax. For a landlord, that removes a layer that exists in New York, California and most other states, and it is a meaningful part of why the state concentrates international buying — the National Association of Realtors recorded Florida taking 20% of all foreign purchases between April 2025 and March 2026.
No state income tax does not mean no tax. Federal obligations apply identically.
Sources
- IRS — FIRPTA withholding
- IRS — estate tax for nonresidents not citizens of the US
- IRS — ITIN and Form W-7
- National Association of Realtors — foreign buyers, April 2025 to March 2026
This article is general information, not tax advice. Rules change and outcomes depend on your residence, treaty position and structure. Confirm with a cross-border CPA before transacting.
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