How to file Homestead Exception and Save on Property Taxes in Cenral Florida

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If you just moved to Florida, you may not know about Homestead exemption and how it can save you money on taxes.

What is a Homestead Exemption in Florida?

Homestead Exemption is a tax reduction allowable to homeowners who make their property their permanent residence. If approved, this exemption could reduce the taxable value of your residence by up to $50,000. The first $25,000 of this exemption applies to all taxing authorities. The second $25,000 of exemption excludes School Board taxes and applies to properties with assessed values between $50,000 and $75,000. As a result, the homeowner would enjoy a substantial savings on the taxes levied on their property by the various taxing authorities.

How to file homestead exemption in Florida by County:

The deadline for filing Homestead Exemption is March 1st. Owner is responsible for filing on time and filing can be done online, in person, or via mail. I prefer to do it online because its quick and secure.

The deadline to file is Mar. 1

Orange County:

  • File Online – It’s Safe, Secure and Easy! In order to file on-line, you must have received a Homestead Letter from our office with your individually assigned User-Login and Password. You should receive this packet approximately 4 to 6 weeks following your real estate closing. If you misplaced it, you can request another one.
  • File by Mail/Fax – Download and file.
  • File in Person – Orange County has Satellite Offices which open Jan.11, 2016 and close Feb, 20, 2016? They are located conveniently across Orange County. Click here to see which location is near your home or workplace.

Seminole County Florida:

 

 

IRS Extends Review Time for Non-Resident Tax Returns

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The Internal Revenue Service has extended its hold on certain tax refunds for returns filed by nonresident aliens and other foreign taxpayers on Form 1040NR beyond the usual 180-day limit in order to give extra scrutiny to the refund claims, leaving many undocumented immigrant workers waiting up to 360 days to get the tax refunds they filed this year

The delays may also affect non-resident owners of US rental property where withholding has been applied by their management company or booking agent on rental income received on their behalf. The agents generally provide Form 1042-S to the owner – the form states the amount of rental income received and any withholding applied.  This form must then accompany the non-resident tax return to the IRS for processing any refund.  The IRS claims that they need additional time to review these credits “due to the complexity of some of these refund claims” and that taxpayers will be notified if additional time is needed.

To minimize any potential delay, provide your management company or booking agent with your ITIN by completing and submitting Form W-8ECI.  By completing this form the non-resident owner establishes that they are not a U.S. person, that they are the beneficial owner of the income and that the income is effectively connected with the conduct of a trade or business in the United States.  With this form on file your agent is not required to withhold 30% of rental income.

Reprinted with permission. For further information visitwww.hbitax.com

How to Avoid Foreign Investor 30% Withholding Tax

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What is 30% withholding?
Depending on how you treat the investment property, IRS sometimes requires management companies to withhold 30% of GROSS rents to be withheld and sent to IRS.

How is 30% calculated on a net lease?
The 30 percent withholding tax applied to the gross income rather than the “net rent” received. Thus, the real estate taxes, operating expenses, ground rent, repairs, interest and principal on any existing mortgages, and insurance premiums paid by the lessee on behalf of the foreign owner-lessor, must be included in gross income subject to the 30 percent withholding tax.

30% withholding is bad for cash flow?
Picture yourself buying a 2 bedroom condo and which rents for $1,000/month.  Your rental agent has to withhold $300 right off the top before you pay any expenses. What if AC broke that month and you had $2k in expenses for a new system? Tough, $300 gets withheld.

Common misconception
One of the biggest misconceptions and stopping blocks for Foreign Nationals, aka non-resident owners, when buying real estate in a US, is they think 30% withholding is unavoidable and mandatory. If management company does not know how to deal with the situation, or CPA does not know the forms to file in order to avoid it.

Form to file to avoid 30% withholding
I got this directly from a tax firm: In order to avoid the 30% being withheld by your property manager on the gross rental income, the nonresident owner must provide a Form W-8ECI to the property management company. The Form W-8ECI informs the property manager that the owner is electing to treat the rental activity as a U.S. trade or business and obligates the owner to file a U.S. income tax return to report the rental activity.

How do you pay taxes on rental income as a foreigner?
Property management company will provide 1042-S to IRS and you. You will need that form to file U.S. tax return using form 1040-NR.

IRS Reference
For more detailed information visit the IRS Website

Disclaimer:
I am not a CPA and I am providing this for informational purposes only. You should verify this information with your own CPA to see if it’s applicable in your situation.

How to Check if there are Open Permits on the house yourself

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Have you ever wondered if there are any open permits on the property you are buying?

Maybe you are thinking of selling and are in the process of preparing you house for sale and don’t want o see any last minute surprises which can delay closing and cost you time money and even make the whole deal fall apart.

close-expired-permits

It’s a good idea to run a search early to see if here is anything unusual. The status you want to see is “complete”. If a permit is “issued” or “expired” or “void”

Here are some links we use in Orlando area to search for open permits.

Orange County: https://fasttrack.ocfl.net/OnlineServices/Permit_Building.aspx

Seminole County: https://egov.seminolecountyfl.gov/Click2GovBP/SelectPermit.jsp

 

Bonus Info:
If you lost the permit or wind blew it away, you can also use this link to download and print a new copy.

UPDATE: Here is a tool to easily look up permits throughout the United States

https://www.buildzoom.com/map/nation-wide/

Orlando Market Pulse – Oct 2015

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ORRA sales
* Monthly revised sales. ** Includes listings with a status of “Active With Contract.”
Complete stats and data may be found under Market Info at orlandorealtors.org. Comments or suggestions? Contact Mike Blinn, Statistician.

Market Pulse™ data represents all listings taken or sold by ORRA brokers, regardless of location and is exclusive to residential property, which includes townhomes, duplexes, single-family homes, and condos. It does not include vacant land or commercial transactions.
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