Knowing the tax percentage in the United States is an essential step before buying or renting a property. Why? This tax aspect can have a significant impact on the profitability of your real estate investment, especially if you live outside the country. The US tax system is complex and varies from state to state, so understanding its implications is crucial to avoid costly mistakes or unexpected cost overruns.
Key Taxes When Buying Property in the U.S.
There are several taxes associated with the property acquisition process that could impact on the initial budget and long-term return. Below, we detail the most important ones:
Property tax: tax percentage in the United States
It is an annual tax levied on all real estate properties, sin importar whether occupied or rented. It is based on the assessed value of the property, determined by the county taxing authority. The rate varies by region. However, it generally ranges from 0.5 % to 2.5 % of the assessed value (Waters, 2023).
In this respect, important points to remember are:
- It is recurrent: the property tax is paid every year, even if you no longer have a mortgage.
- It may increase over time: if the property value increases after a tax revaluation, so will the tax.
- Applies to all types of property: all are subject to tax.
Transfer tax percentage in the United States
It consists of a single payment made at the closing of the property purchase. This tax is calculated as a percentage of the transaction value and may vary not only from state to state, but also from county to county or city within the same state.
In Florida, for example, the state tax rate is 0.80 % of the total transaction amount. However, if you purchase in a city with a local surcharge, the tax percentage in the United States (La Nación, 2025). Furthermore, in certain jurisdictions, the buyer and seller can negotiate who pays this tax, although en general it falls on the buyer.
So, among the things you should know are:
- It is a closing cost: it is paid in a unique form when the property changes hands.
- Some states don’t require it, but many do, especially in urban areas with high real estate activity.
- In commercial or multi-family operations, the amount could be substantial.
Foreign Real Estate Tax (FIRPTA)
One of the crucial aspects for international buyers is the FIRPTA (Foreign Investment in Real Property Tax Act). This is a federal law that imposes a mandatory withholding of 15 % on the gross sales price when the seller is a foreigner (Tax Foundation, 2024).
The buyer does not pay the tax percentage in the United States, but they are legally required to withhold and remit the amount to the IRS. Failure to do so could result in the buyer’s liability and face penalties.
Why does FIRPTA exist? Some of the reasons are:
- Its objective is to ensure that foreign sellers comply with their U.S. tax obligations.
- Because these are international transactions, the IRS uses this withholding as a guarantee of payment. This is because recovering taxes from non-residents is sometimes complicated.
In addition to considering the tax percentage in the United States, you should consider other important aspects:
- If you buy a property from a foreigner and don’t withhold the appropriate 15 %, you could be liable to the IRS for the full amount.
- This money is withheld at the closing of the sale and may be returned to the foreign seller if they file a correct tax return and meet the exemption requirements.
- In some cases, it’s possible to request a Withholding Certificate from the IRS before closing. This allows for reducing or eliminating withholding if justified.
For more information on the FIRPTA tax rate in the United States, please contact the IRS directly. There, you’ll find details on tax payments for foreign-owned properties.
Taxes related to property rentals
Are you planning to buy it to rent? Then you’ll need to consider several income and sales taxes that could affect your profits.
Tax percentage in the United States on rental income
Landlords must report rental income to the IRS. The rate will depend on your annual income, your immigration status, and whether you file as an individual or legal entity.
- For nonresident individuals, the tax percentage in the United States reaches up to 30 % of gross income (IRS, 2025). However, there is the option to pay taxes net of operating expenses.
- For residents or Green Card holders, net income ranges from 10 % to 37 %, according to IRS scales (Sanchez, 2025).
Also, keep in mind that if there are double taxation agreements, you will have to file your income tax return in your home country.
Percentage of income tax in the United States
Some states charge an additional tax. Florida is an exception: it has no state income tax, which is an advantage for many investors.
Short-term income taxes
If you rent your property for short periods on platforms like Airbnb, you’ll have to pay taxes similar to VAT (sales tax). You’ll also have other local charges, such as bed tax. Here, the tax percentage in the United States for Florida ranges from 6 % to 13 % of the income (Florida Revenue, 2025).
Factors affecting property tax
The tax percentage in the United States on the purchase or rental of real estate is not uniform. Below, we explain the factors that most affect the tax burden on a property.
Geographic location
Location is undoubtedly one of the most determining factors. The property tax system in the United States operates en principio at the local level. This means that each state, county, and even city sets its own property tax rates. The result: two properties with similar values could have very different tax obligations depending on their location.
By conducting a detailed geographic analysis before investing, you’ll be able to identify the tax percentage in the United States for each jurisdiction. Finding the most tax-efficient areas will impact the profitability of your investment.
Use of property
The purpose for which a property is used affects the tax percentage in the United States. In other words, tax authorities classify properties according to their primary use. Thus, each category has a different tax treatment. The most common are:
- Primary residential: Owner-occupied properties used as primary residences. They often benefit from lower rates and special tax exemptions.
- Secondary or vacation residence: Properties not used as a primary residence. They generally pay higher rates and don’t qualify for certain exemptions.
- Commercial or industrial: Buildings used as businesses, offices, warehouses, or retail spaces. The tax percentage in the United States, as they are considered revenue-generating buildings.
- Short-term rentals or vacation rentals: Properties used for temporary rentals, through platforms like Airbnb. In many jurisdictions, such uses tend to be subject to higher fees or additional taxes. One example is the temporary accommodation tax.
Therefore, it’s essential to define the purpose of your investment from the outset. For example, if you plan to purchase a home for short-term rental in a tourist area, you’ll likely have to pay a higher tax percentage in the United States.
Appraised value of the property
The assessed value of a property is fundamental in determining the property tax. This value is set by the local tax authority. While it is usually based on market value, it is determined by criteria specific to each jurisdiction. It is important not to confuse it with the purchase price or market value.
Every year, local governments review assessed values to adjust them to the changing real estate market. During the periods of rapid appreciation experienced in South Florida over the past decade, it’s common for assessed values to rise year after year, proportionally increasing the tax percentage in the United States.
In addition, some counties apply limits to the annual increase in assessed value to prevent homeowners from facing steep tax increases. This mechanism, known as “cap assessment” or “valuation” cap “, protects those who live in your home permanently.
To anticipate such changes, it’s advisable to request a history of the property’s appraised value before purchasing. It’s also a good strategy to project possible future scenarios of increased tax burdens.
Exemptions or deductions from the percentage of tax
Many states and counties in the United States offer tax exemptions that significantly reduce the tax payable. One of the best known is the Homestead exemption. Exemption, which allows homeowners who occupy their home as their primary residence to deduct a portion of the property’s appraised value.
In the state of Florida, for example, this exemption can reach $50,000 over the assessed value (La Nación, 2025). This represents a direct saving on the tax percentage in the United States corresponding to the Property Tax. To qualify, the owner must meet certain requirements. These include permanent residence on the property and submitting the application within the established deadlines.
At the same time, there are deductions for structural improvements, the installation of energy-efficient systems, or municipally approved renovations. Although not all areas offer them, it’s worth exploring them before making additional investments in the property after purchase.
Tax percentage in the United States strategies for foreign investors
Investing in real estate in the United States as a foreigner has advantages, but it also requires strategy. Here are some best practices to reduce the impact of the tax percentage in the United States on your portfolio:
- Consult with an accountant specializing in international investments. A professional will help you interpret tax treaties between the U.S. and your home country.
- Consider forming an LLC. Many investors choose to structure their investments through a Limited Company. Liability Company (LLC) separates your personal assets and optimize your taxation.
- Take advantage of deductions. You can deduct mortgage interest, maintenance costs, property depreciation, and management fees.
- Keep your finances organized. Keep a clear record of your income and expenses, including the tax percentage in the United States you owe on each asset. On the other hand, filing your tax returns on time avoids fines and legal issues.
- Check state regulations. Each state has its own rules. Being fully informed is a competitive advantage.
Why invest with comprehensive advice?
If you’re unsure of the tax percentage in the United States you owe, or unfamiliar with the dynamics of the South Florida real estate market, you need expert guidance. Many Latin Americans choose PFS Realty Group not only for its experience in this area, but also for its comprehensive approach to the real estate investment process.
From property selection to property management and connecting with tax advisors, our team is with you every step of the way. Are you interested in generating passive income? Opt for our dollar-based rental program, which helps improve your return based on real profitability standards.
Key benefits of working with PFS Realty:
- Specialized legal and tax advice.
- Extensive portfolio of properties in Miami, Orlando, Tampa, and more.
- Partnerships with financial institutions to facilitate mortgages.
- Management and maintenance services to enhance the value of your investment.
Understanding the tax percentage in the United States is essential before buying or renting a property. Every tax detail impacts your profitability. If you’re ready to invest wisely, visit PFS Realty, where we’re here to help you every step of the way. Our team is responsible for identifying the best areas, minimizing your tax burden, and maximizing your income in dollars.
Invest with information and support. Choose PFS Realty Group.
References
- Florida Revenue. (2025). Local Option Transient Rental Tax Rates.
- Internal Revenue Service. (2024). Publication 530: Tax information for homeowners. U.S. Department of the Treasury.
- IRS. (2025). Los impuestos a extranjeros no residentes.
- La Nación. (2025). En Florida: la nueva ley que beneficia a propietarios y les permitirá ahorrar hasta US$50 mil en impuestos.
- Sánchez, S. (2025). Impuestos en Miami, Florida: ¿cuáles son y cuánto debo pagar? Holafly.
- Tax Foundation. (2024). Property Taxes by State and County, 2024. Tax Foundation. Datos actualizados sobre tasas de impuestos a la propiedad por estado y condado.
- Waters, S. (2023). Guía tributaria de Florida: lo que pagarás en el 2023. AARP.