2014 was a Stellar Year for Real Estate Sales to Foreign Investors

Foreign Land Investors

In the year to June, non-resident foreign buyers purchased an estimated US$7.97 billion worth of Florida real estate, according to a report from the National Association of Realtors (NAR) and Florida Realtors.  This compares to just US $6.43 billion in the same period a year earlier.  This represents a rise of US $1.5 billion or nearly a quarter (approximately 23%).

According to the NAR’s Profile of International Home Buyers in Florida 2014 report, about a third (32%) of these purchases were made by Canadian buyers.  A further 24% of total spending came from buyers in the Western Europe, particularly the UK, Germany and France.  Latin American and Caribbean investors were collectively close behind their Western European counterparts when it came to buying home, lots and acreage for sale in Florida, providing a further 23% of all foreign funds.  Many of these investors are resident in Brazil or Venezuela.  Asian buyers made up 10%, with China alone accounting for 6%.  As China represented just 1% of Florida real estate purchases by foreign buyers a few short years ago, it seems the country’s investors are rapidly taking a greater interest in Florida and in US markets in general.  Central Europe, the Middle East and Africa represented fairly small percentages of the total pot, 5%, 4% and 2% respectively.

Overall, these figures suggest that a full 10% of the total residential market in Florida was made up of sales to foreign buyers, up from 9% last year.  Furthermore, it shows the significant popularity of Florida with foreign buyers, as roughly 17% of the US $46.7 billion spent by foreigners on US properties went towards purchases in Florida.  Of all foreigners buying and holding one or more US properties, roughly a quarter are believed to own at least one unit in Florida.

In terms of the number of units purchased by this near US $8 billion pot of spending, it is estimated that international buyers snapped up around 26,500 individual properties in Florida.  This compares to just 22,600 in the same period a year earlier, representing growth of just over 17%.

According to the report: “The increase in international home buying activity was driven by the continued recovery of the world economy and the affordability of US properties.  Both US and Florida residential prices remain affordable to most international homebuyers.”  It was noted that the strong position of many currencies against the US dollar was a factor in the decision to purchase, making US properties more affordable as foreign buyers can get more for their money.

The report also went on to note that “international clients continued to purchase properties, lots and land for sale that are on the average above the mean price paid by domestic buyers.”

Compared to a national average of just 28%, over half of Florida real estate agents (52%) have international buyers among their list of clients.  However, this figure is down from last year’s 63%. Of these, almost one in five (19%) has at least six foreign clients, and 20% say that more than a quarter of their business comes from international buyers.

To work with Florida’s premier land sales firm, Gratia Group, call us today at (239) 333-2221.

Cul-de-sac, Country Lot in NW Cape- Gratia Group Featured Lot of the Week

3511 Delilah Drive Cape Coral FL

 

This week the Gratia Group proudly announces the release of a wonderful investment lot or home site in NW Cape Coral.  The Gratia Group Featured Lot of the Week features country living while still being in close proximity to shopping, schools and community locations like parks and libraries.  The lot for sale is located at 3511 Delilah Drive Cape Coral, FL 33993. Listed for only $27,900, this cul-de-sac lot will surely sell fast!

Cape Coral is a wonderful place to invest or live.  The real estate has seen a recent resurgence making it a great time to buy land.  The median home value in Cape Coral is $172,900. Cape Coral home values have gone up 15.4% over the past year.  The median price of homes currently listed in Cape Coral is $198,500 while the median price of homes that sold is $165,840.

To learn more about this Cape Coral lot for sale or any of our Featured Lots of the Week, contact a member of the Gratia Group team at (239) 333-2221.

Oversized, Gulf Access Lot in Cape Coral: The Gratia Group Lot of the Week

2341 NW 39th Avenue, Cape Coral, Fl 33993

It’s a big week for investors as we feature a beautiful oversized lot in highly desirable Northwest Cape Coral as the Gratia Group Featured Lot of the Week.  This Cape Coral lot is located at 2341 NW 39th Avenue, Cape Coral, Fl 33993.

This lot isn’t only located in one of the most up and coming areas in the “Cape”, but also feature gulf access, a rarity in this area.  Lots are selling quickly in the NW Cape and listed at $69,800.00 this lot is sure to close fast!  Investors have found great success in Cape Coral land, particularly the northern section of the largest city in Southwest Florida.  A hot spot for boaters, golfers, fishing enthusiasts and those that love the natural beauty of South Florida, Cape Coral is home to a large population of foreign investors.

Don’t miss out on owning a piece of paradise!  Contact Gratia Group today to find out about this ROI producing Cape Coral lot or others in our land catalog by calling a member of the expert land team at (239) 333-2221.

Owning Land can Lead to Worthwhile Tax Deductions

Tax Deductions

FL land has long been viewed by many as an attractive investment.  After all, it’s the stuff they’re not making any more of.  You usually earn no income from  land, but you do have expenses for such items as property tax, interest and other carrying costs.  Can you deduct these costs?  It depends.

First of all, for tax purposes there are two types of people who own vacant land: investors and real estate dealers.  Real estate dealers are in the business of buying and selling land.  A dealer buys property and resells it, usually at a price higher than the purchase price, and normally after only a short holding period.  A good example is a subdivider who buys large tracts of vacant land, divides them into smaller lots, and then resells the lots separately.  Numerous and continuous sales over an extended time period are the hallmark of a real estate dealer.

Real estate dealers are entitled to much the same deductions as any other business owner.  They can deduct all the expenses of owning the vacant land they buy and sell, including interest, taxes and other carrying costs.  If a sole proprietor, these are deducted on IRS Schedule C.

On the downside, all the profits real estate dealers earn from their business are taxed at ordinary income rates instead of capital gains rates.  Moreover, they must pay Social Security and Medicare taxes on their net self-employment income, as well as income tax.  Also, real estate dealers are not allowed to take depreciation deductions.  So if land has structures on it, their cost cannot be deducted.

A person who purchases real estate as an investment is not in the business of buying and selling vacant land on a continuous and extended basis.  Rather, he or she purchases land and usually holds on to it for some time in the hope that it will appreciate in value.

Since an investor is not engaged in a business, he or she is not entitled to business deductions and does not file Schedule C.  However, many investment expenses are deductible as personal itemized deductions on Schedule A.  These expenses are an ordinary tax deduction that results in tax benefits at your regular income tax rate, which can be as high as 39.6 percent (43.4 percent if you’re subject to the Medicare net investment income tax).

Any interest an investor pays on money borrowed when buying investment land is investment interest that can be deducted only as an itemized personal deduction.  Moreover, the annual deduction for investment interest is limited to the investor’s net investment income for the year.  Any excess is carried over to future years.  You determine the amount of your net investment income by subtracting your investment expenses (other than interest expenses) from your investment income.

Example: George purchases a vacant lot on which he pays annual property taxes of $1,000 and interest of $2,000.  His only other investment is a savings account, which earns $2,000 in annual interest.  His net investment income is $1,000 ($2,000 interest income – $1,000 property tax expense = $1,000).  Thus he may deduct only $1,000 of his interest expense.  The excess $1,000 is carried over to future years.

An investor can also deduct property taxes paid on vacant land as a personal itemized deduction on Schedule A.  This deduction is not limited to the amount of net investment income.

Any other carrying costs such as legal and accounting fees, insurance, and travel expense are also deductible on Schedule A.  However, they are deductible only as miscellaneous itemized deductions.  This means that they can be deducted only if, and to the extent, they exceed 2 percent of the taxpayer’s adjusted gross income.

If you don’t itemize your deductions on your tax return, you won’t be able to deduct any of the expenses you incur from owning vacant land.  In this event, you should elect to add these expenses to your land’s cost basis.  This will reduce any taxable profit you earn when you sell the property.

Example: Jean purchases a vacant lot for $10,000 in 2009.  During 2009-2013 she elects to add $5,000 in carrying costs to the lot’s cost basis.  In 2013, her adjusted basis in the lot is $15,000.  She sells the lot for $20,000.  Her taxable gain is only $5,000 ($20,000 sales price – $15,000 adjusted basis = $5,000).

You must make an annual election to add these costs to your land’s basis — “capitalize” them in tax jargon.  You can elect to capitalize all your costs, or capitalize some and not others — for example, you could capitalize interest but not taxes.

To make this election you should add a statement like the following to your tax return:

“For tax year _____, taxpayer hereby elects under Code Section 266 and IRS Regulations 1.266-1 to capitalize, rather than deduct, property taxes, mortgage interest, insurance expenses, and other miscellaneous carrying costs on the 111 First St. vacant lot.”

You need to make this election each year you want to add these costs to your land’s basis.  If you wish, you can make the election some years you own the property, and not make it in others.

To learn more about buying land and lots for sale contact a member of the Gratia Group land sales team at (866) 501-6273.

Enjoy Sailboat and Gulf Access with the Gratia Group Featured Lot of the Week

3428 SANTA CLARA DR

Boat enthusiasts are sure to love the Gratia Group Featured Lot of the Week, a beautiful Florida lot with sailboat and gulf access.  Located at 3428 Santa Clara Drive in Punta Gorda, Florida this lot also offers river and harbor access, giving boaters access to virtually every type of waterway in the city. Listed at only $55,000 this lot is located in the popular Harbour Heights area of Punta Gorda.

Harbour Heights is a cozy community nestled along the Peace River in Charlotte County, Florida.  This secluded community is particularly attractive to retirees and Baby Boomers.  With fewer than 3,000 residents, the community has the feel of a small town, where everyone knows their neighbors.  Enjoy the Florida outdoors under shady old oak trees at Harbour Heights Park, which has a boat ramp, fishing pier on the Peace River, picnic tables and barbeque grills, basketball, tennis and shuffleboard courts.  There are numerous public golf courses nearby, and the community park provides a tranquil place to relax.  Here the Harbour Heights Horticultural Society thrives, and the Women’s Club and Civic Association sponsor town events.  The nearby Deep Creek elementary school and park playground attract families and children.

The weather is always beautiful, and naturalists and bird enthusiasts abound, reveling in the Florida landscape, and the local bird sanctuary.  Whether you long for a view of the mangrove islands or a glimpse of an egret, dolphin or manatee, you are never far from the water.  Here you can canoe and fish to your heart’s content.  You can enjoy the nearby convenience of I-75, the Fort Myers airport, and Port Charlotte and Punta Gorda, where you will find restaurants, schools, entertainment, medical facilities, and grocery stores.

To learn more about the Gratia Group Featured Lot of the Week or any of our many land and lots for sale throughout South Florida, contact a member of the Gratia Group Land Team at (239) 333-2221.

Gulf Access in NW Cape Coral is this week’s Gratia Group Featured Lot

1803NW38CapeCoral

This week’s Gratia Group Featured lot of the week, is a great home site in the desirable NW region of Cape Coral.  This is a stunning Gulf Access Cape Coral land lot, and is in very high demand!  This awesome Gulf access lot is listed at only $52,000 and is going to sell quickly with more and more investors invading the Cape Coral land market.

Investors have found great success in purchasing Cape Coral lots, particularly in the northern section of the largest city in Southwest Florida.  A hot spot for boaters, golfers, fishing enthusiasts and those that love the natural beauty of South Florida, Cape Coral is home to a large population of foreign investors.  Don’t miss out on owning a piece of paradise!

To learn more about the Gratia Group Featured Lot Package of the Week or any of our lot and land listings in Cape Coral and other hot SWFL cities and towns, contact a member of our land sales team at (239) 333-2221.

Southwest Florida Housing Starts on Upswing

HomeStartUpSwingHousing starts in Southwest Florida spiked sharply in the second quarter, according to a report issued by housing data provider Metrostudy.  Overall, starts in Lee and Collier counties increased 11.4 percent from 778 single-family homes in the first quarter to 867 in the second, according to Metrostudy, which tracks new-home construction in subdivisions in the Fort Myers-Naples area and other markets around the country.

Also, Collier has almost caught up with its larger neighbor Lee, accounting for almost half of the starts so far this year.  The strong showing in Southwest Florida was part of a pattern in which some of the most ‘beaten-down’ markets such as the Cape Coral property scene are now doing better.

It’s important to remember that the current pace of new-home construction is still a shadow of what it was before the housing boom collapsed in late 2005.  By year’s end the region is going to get around 8,500 single-family permits for Lee, Charlotte and Collier counties.  That’s far from the 45,000 the region had at the peak (2005); it’s far from the 10,000 the area had in the year 2000.  as you can see Florida land sales and home starts are on the rise!

To learn more about SWFL land and the market in the area call a member of the Gratia Group land sales team at (239) 333-2221.