Faced with economic uncertainty and a depreciating currency at home, high net worth Brazilians increasingly view the U.S. real property market, in particular cities such as Miami and New York, as a safe investment haven. Based on recent estimates, foreign investment accounted for 36 percent – over $6 billion – of all real estate investment in the Miami area in 2015, with Brazilian investors now the major players in the market for luxury accommodation.
Investment in U.S. real estate is attractive for several reasons: there are no restrictions or special taxes on the ownership of real property by foreign nationals; dollar-based investments are viewed as relatively safe; and the returns on real estate investments in cities such as New York and Miami, both residential and commercial, continue to be robust. However, by investing in U.S. real estate, foreign nationals face exposure to a variety of Federal, state and local taxes, as well as associated compliance and reporting requirements, the nature of which depends in part upon how the investment is structured.
Our recent summarizes the principal U.S. tax implications of acquiring, owning and disposing of U.S. real estate. It also highlights the advantages and disadvantages of some potential investment structures. However, because the rules are complex and their application depends upon individual circumstances, any Brazilian national planning such an investment should consult a qualified tax adviser or accountant prior to buying property.