FOUR CORNERS – There are a lot of factors that go into making a home appealing to buyers – its size, location, and price, among them.
But for Central Florida, where vacation and luxury homes are a significant part of the market, the nation’s tax laws might be just as crucial. That’s because the region has traditionally attracted plenty of foreign investors who, in addition to safe home to investment their money in, may also be looking for a decent break on the high tax bills they’re confronted with back home.
Matthew L. Bell, a managing member of the CPA firm Bell & Van Grondelle, said the new tax package passed by Congress in December’s “lame duck” session could significantly help areas like Northeast Polk County and Four Corners, where Bell has his office and where a lot of the homes for sale are vacation homes that attract buyers from overseas.
The legislation, he said, extends tax cuts approved under President George W. Bush that offer zero capital gains on the first $68,000 on a home purchase.
“For an individual from overseas who invests in properties, it’s a significant savings,” Bell said. “If you had a husband and wife who purchased a property, they could save up to about $70,000 worth of capital gains on the property. Anything above the $70,000 would be taxed at 15 percent.”
That’s likely to sound downright cheap to many Europeans, particularly those in Northern Europe, Bell said.
“Many of these folks come from countries where capital gains are taxed at over 40 percent,” he said.
Already, the Four Corners area is getting inquiries from Europeans who still view Central Florida as a smart investment, Bell said.
“We’re seeing a lot of folks from Scandinavian counties who are investing, and they are always pleasantly surprised when they talk about capital gains in the United States,” he said.
The exact figure of the tax break is $68,000 for married couples filing together.
“If they own the property for at least a year, they would have zero capital gains for up to that amount,” he said.
It doesn’t matter if the buyers are U.S. citizens, he added.
“For real estate sales, what ends up happening is the U.S. government considers them to be just like an American citizen for the sale of the real estate on U.S. soil,” Bell said. “They’re afforded the same tax breaks. That was one of the Bush tax cut extenders that came through, and it was extended for 2011 and 2012.”
Central Florida’s housing market has been struggling since it collapsed in 2008, leaving a sky high inventory of unsold homes, and a very high home foreclosure rate. Prices have fallen steadily ever since.
But foreign investors never fully lost interest in the region, Bell said, and declining prices on some luxury properties only made the region more appealing. Adding in lower taxes on those investments only sweetens the deal, he said.
“I think it definitely is a good selling point,” Bell said. “What ends up happening is a lot of real estate agents in the United States have marketing agents overseas sending clients to them. We’re one of the spokes in the wheel, and many times agents will send their clients to us because they’re wanting to know about tax breaks on their purchases.
“What we tell folk,” he added, “is about the great capital gains regime right now. That’s another selling point for them to tell their clients about.”
As long as these tax breaks stay in place, Bell said, areas like Four Corners should continue to attract the interest of foreign buyers who know a good tax deal when they see one.
Bell’s office is at 600 Cagan Park Ave., Suite 8 in Four Corners. To learn more, call 863-420-0499 or email Matt@bellvancpa.com.
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