Florida Regulations and Considerations in
Cross-Border Real Estate Transactions
DISCLAIMER: THE INFORMATION PROVIDED HEREIN IS OF A GENERAL NATURE, FOR
INFORMATION PURPOSES ONLY AND IS NOT TO BE RELIED UPON OR CONSTRUED AS
REAL ESTATE, LEGAL, TAX, ACCOUNTING OR OTHER PROFESSIONAL ADVICE OR
OPINION. YOU SHOULD NOT USE ANY INFORMATION CONTAINED HEREIN AS A
SUBSTITUTE FOR CONSULTATION WITH LEGAL OR ACCOUNTING PROFESSIONALS OR
OTHER PROFESSIONAL ADVISORS.
1. Florida Realtors®:
The mission of Florida Realtors® is to advance Florida’s real estate industry by shaping public
policy on real property issues; encouraging, promoting and teaching consistent standards for
ethical practice and professionalism; and building on the efforts of local Boards/Associations to
provide the information and tools members need to succeed. Florida Realtors is the largest trade
association in the state with more than 140,000 members.
2. Regulations and Regulatory Bodies in Florida and the United States
a) Florida Department of Business and Professional Regulation (DBPR) and the Division of
Real Estate: DBPR is the regulatory body charged with licensing and enforcement. All
REALTORS® are licensees under DBPR. However, all licensees under DBPR are not
members of Florida Realtors®. The Division of Real Estate under DBPR is responsible for
the examination, licensing and regulation of more than 342,000 real estate and appraiser
professionals, corporations, schools and instructors, pursuant to Chapters 455 and 475,
Florida Statutes. Additionally, the division provides administrative support to the Florida
Real Estate Commission (FREC) and the Florida Real Estate Appraisal Board (FREAB).
b) Florida Commission on Human Relations: The Commission is the state agency charged with
enforcing the state’s civil rights laws and serves as a resource on human relations for the
people of Florida. Chapter 760 of the Florida Statutes and the federal and Florida Fair
Housing Act.
c) United States Department of Housing and Urban Development: The Federal Department
charged with policing violations of the Fair Housing Act, Americans with Disabilities Act.
d) United States Consumer Financial Protection Bureau: The Federal Agency charged with
policing violations of the Truth In Lending Act (TILA) and the Real Estate Settlement
Procedures Act (RESPA).
e) REALTOR® Code of Ethics and Pro Standards.
3. Licensing
A Broker
Chapter 475 of Florida Statutes, as amended was created, to license and regulate the practice of
real estate brokers and salespersons in Florida. Chapter 475 defines a real estate broker as a
person who, for another, and for a compensation or valuable consideration directly or indirectly
paid or promised, expressly or impliedly, or with an intent to collect or receive a compensation or
valuable consideration therefor, appraises, auctions, sells, exchanges, buys, rents, or offers,
attempts or agrees to appraise, auction, or negotiate the sale, exchange, purchase, or rental of
business enterprises or business opportunities or any real property or any interest in or concerning
the same, including mineral rights or leases, or who advertises or holds out to the public by any
oral or printed solicitation or representation that she or he is engaged in the business of
appraising, auctioning, buying, selling, exchanging, leasing, or renting business enterprises or
business opportunities or real property of others or interests therein, including mineral rights, or
who takes any part in the procuring of sellers, purchasers, lessors, or lessees of business
enterprises or business opportunities or the real property of another, or leases, or interest therein,
including mineral rights, or who directs or assists in the procuring of prospects or in the
negotiation or closing of any transaction which does, or is calculated to, result in a sale, exchange,
or leasing thereof, and who receives, expects, or is promised any compensation or valuable
consideration, directly or indirectly therefor; and all persons who advertise rental property
information or lists.
A Broker Associate
A broker associate is defined as a person who is qualified to be issued a license as a broker but
who operates as a sales associate in the employ of another.
A Sales Associate
Sales associate is defined as a person who performs any act specified in the definition of
“broker,” but who performs such act under the direction, control, or management of another
person.
4. Payments Requirements
In regard to payment of commissions to cooperating brokers who are licensed only in Ontario,
Canada; Florida Statutes 475.25(1)(h) generally prohibits payment of a commission to a person
not licensed in Florida. However, it does provide as follows:
“…however, a licensed broker of this state may pay a referral fee or share a real
estate brokerage commission with a broker licensed or registered under the laws
of a foreign state so long as the foreign broker does not violate any law of this
state.”
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The National Association of REALTORS® has developed a valuable resource library for
international deals. Materials may be accessed at http://www.realtor.org/field-guides/field-guideto-international-referrals
5. Transactions & Listings
Multiple Listing Service (MLS): An MLS is a private offer of cooperation and compensation by
listing brokers to other real estate brokers. MLSs are private databases that are created,
maintained and paid for by real estate professionals to help their clients buy and sell property.
Florida does not have a state-wide MLS®. Florida properties represented by a REALTOR® are
generally listed in the MLS® of the Listing Broker. These transactions, relating to advertising,
representation, and compensation and cooperation are governed by the MLS® Rules and
Regulations adopted by the MLS®. There is generally a fair amount of overlap around the state.
However, it is worth acquainting yourself with the various regional approaches.
Florida Realtors hosts a consumer website that allows them to search for a Realtor based on
location and specialty. To find out more, go to: http://fl.living.net
6. Closing a Transaction
Generally speaking, the closing of a Florida real estate transaction is handled by a Title Company
or Closing Agent. For both the buyer and seller, a reputable title company or closing agent is of
paramount importance. The Title Company or Closing Agent will conduct the necessary title
searches and a thorough examination of the records for the property. At the closing, a settlement
agent from the Title Company or the Closing Agent will review all the necessary documentation
with the parties, collect closing costs and distribute monies. Finally, the title company or closing
agent will ensure that the new deed, mortgage, and other documents are appropriately filed. The
Title Company or Closing Agent will also issue, for a fee, Title Insurance Policies to the buyer
and lender, if any. In addition, the buyer and seller may want to have their own attorneys review
the closing documents.
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7. Taxes
i) The Documentary Stamp Tax
ii) Property Taxes
i)
The Documentary Stamp Tax
Documentary stamp tax is levied at the rate of $.70 per $100 (or portion thereof) on
documents that transfer interest in Florida real property, such as warranty deeds and quit
claim deeds. (The Miami-Dade County rate is $.60 on all documents plus $.45 surtax on
documents transferring anything other than a single-family residence). This tax is usually
paid to the Clerk of Court when the document is recorded. The Clerks of Court send the
money to the Department of Revenue and the Department distributes the funds according to
law.
Documentary stamp tax is also levied at the rate of $.35 per $100 (or portion thereof) on
documents that are executed or delivered in Florida, for example:
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Notes and other written obligations to pay.
Certain renewal notes.
Bonds (original issuance).
Mortgages.
Liens.
Florida law limits the maximum tax due on notes and other written obligations to $2,450.
However, there is no limit on the documentary stamp tax due for mortgages or liens filed or
recorded in Florida. Tax is paid to the Clerk of Court if the document is recorded, or sent
directly to the Department of Revenue if the document is not recorded.
Documentary stamp tax is payable by any of the parties to a taxable transaction. If one party
is exempt, the tax must be paid by the nonexempt party. United States government agencies;
Florida government agencies; and Florida's counties, municipalities, and political
subdivisions are exempt from documentary stamp tax. More information here:
http://dor.myflorida.com/dor/taxes/doc_stamp.html
ii)
Property Taxes
Though the state government does not collect any property taxes, local governments receive
much of their funding through these taxes. These rates are assessed at the local level and can
vary by county, and they are based on the value of the property. There are several exemptions
to try to lighten the load on property taxes.
Assessments on second homes and most non homestead properties in Florida are capped at 10
percent.
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Property Tax Exemption:
Homestead Exemptions are available on primary residences in Florida. These exemptions
can be available up to $50,000. However, only the first $25,000 of this exemption applies to
all taxes. The remaining $25,000 only applies to non-school taxes.
Widow(er) Exemptions of $500 are available to widows and widowers who have not
remarried. If you were divorced at the time of your ex-spouse’s death, you do not qualify for
this exemption.
Senior Citizen Exemptions are available in certain counties and cities only. They are valued
up to $50,000 for residents 65 years old and older who have gross income below $20,000 in
2001 dollars, adjusted for inflation. This exemption is in addition to the Homestead
Exemption. http://dor.myflorida.com/dor/property/brochures/pt110.pdf
Blind Person Exemptions of $500 are available to Floridians who are legally blind.
Total and Permanent Disability Exemptions are available for homeowners who have a
total and permanent disability. Quadriplegics who use their property as a homestead are
exempt from all property taxes. Others who must use a wheelchair for mobility or are legally
blind and have a gross income below $14,500 in 1991 dollars, adjusted for inflation, can be
exempt from all property taxes as well.
Veterans Exemptions exist in a number of different forms.
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A veteran documented as disabled by 10% or more in war or service-connected events can
earn an additional exemption of $5,000 on any owned property.
An honorably discharged veteran who is totally and permanently disabled or requires a
wheelchair for mobility due to their service can be exempt from all property taxes. In some
circumstances, this benefit can be transferred to a surviving spouse.
An honorably discharged and disabled veteran who is 65 or older who was a Florida resident
when they entered military service may be eligible for an additional exemption. The disability
must be permanent and must have been acquired as a result of the military service. The
property tax will be discounted based on the percent of the disability.
Members of the military deployed during the last calendar year can receive exemptions based
on the percent of time during the year they were deployed.
Save Our Homes
As provided in Section 193.155(1), Florida Statutes, beginning in 1995, or the year
after the property receives homestead exemption (primary residences), an annual
increase in assessment shall not exceed the lower of the following:
a. Three percent of the assessed value of the property for the prior year; or
b. The percentage change in the Consumer Price Index (CPI) for all urban consumers,
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U.S. city average, all items 1967 = 100 or successor reports* for the preceding
calendar year as initially reported by the U.S. Department of Labor, Bureau of Labor
Statistics.
8. Other Potential Expenses
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Appraisal fees
Survey fee
Title insurance fee
Home inspection fee
Property insurance
Condo fee
Homeowners’ Association Fees
Closing Costs
9. Renting Purchased Property
Many Florida REALTORS® operate as Property Managers for both residential and commercial
property owners. Anyone who wants to advertise or offer for lease, negotiate the lease, and
engage in the business of leasing must have a real estate license. If the property manager, for
another and for valuable consideration, is going to procure the tenant, advertise the property for
rental, or negotiate the rental, then a real estate license is required. All real estate activity is to be
handled through the real estate company and broker. Income generated from rental property is
subject to taxation as income. Working with a local Certified Public Accountant or someone well
acquainted with State and Federal Taxation would be wise. There are many tax considerations
that may spur different approaches to ownership.
10. Foreign Ownership
There is no citizenship requirement for ownership of real property in the United States. Whether
the foreign buyer is a foreign citizen, a domestic corporation or foreign investment entity are all
important considerations for the buyer regarding long-term tax implications. A discussion of
direct ownership versus ownership through a foreign or domestic corporation is one that should
occur between the buyer and their accountant or tax attorney.
A basic understanding of the withholding requirements under the Foreign Investment in Real
Property Tax Act of 1980 (FIRPTA) is essential when it comes to disposition of real property by
a foreign person.
a. http://www.irs.gov/Individuals/International-T axpayers/FIRPTA-Withholding
b. http://www.irs.gov/Individuals/International-Taxpayers/Exceptions-from-FIRPTAWithholding
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11. Helpful Contacts
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Florida Realtors Headquarters in Orlando
7025 Augusta National Dr.
Orlando, FL 32822-5017
Phone: 407 438 1400
Fax: 407 438 1411
Website: www.floridarealtors.org
Office of Public Policy Headquarters in Tallahassee
200 S. Monroe St.,
Tallahassee, FL 32301-1824
Tel: 850 224 1400
Fax: 850 224 0702
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Department of Business and Professional Regulation
Division of Real Estate
400 West Robinson Street, N801
Orlando, Fl 32801
Phone: 850 487 1395
Fax: 407 317 7245
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The Florida Bar
651 E. Jefferson Street
Tallahassee, FL 32399-2300
Phone: 850 561 5600
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