Rubio wants foreign home buyers in Miami-Dade to pay more taxes
Miami residents are competing for housing with foreign and out-of-state buyers, who are often able to pay cash and above asking price, and their ability to keep pace is dwindling as local wages remain stagnant.
In response, Florida Republican Sen. Marco Rubio is introducing a bill that would reduce foreign speculation of residential real estate in urban centers like Miami by increasing the tax rates of real estate sales by foreign investors. And Rubio would combat real estate transactions funded by illicit activity or money laundering by prompting the Treasury Department to report the natural identities of foreign buyers and the source of funds received by the seller.
“As billions of dollars pour into South Florida real estate, much of it is connected to foreign illicit activity, causing families in our communities to face an ever increasing challenge of finding affordable housing.” Rubio said in a statement. “Combating illicit finance in foreign real estate investment and increasing affordable housing investment in South Florida is key to tackling this problem confronting so many Floridians, and this bill would do exactly that.”
Rubio’s legislation, titled Home Advantage for American Families, was introduced Thursday in response to the 2019 Miami Herald series Priced Out of Paradise, which highlighted the consequences of stagnant real wages, housing prices hypercharged by rising demand and big foreign money, and a short supply of places to live that locals can actually afford.
The bill authorizes the Treasury Department to require a report on behalf of the Financial Crimes Enforcement Network (FinCEN) for each transaction of residential real estate to a foreign buyer within the top 15 Metropolitan Statistical Areas in the country.
The report would require the natural identities of any foreign buyer, the amount and source of funds received by the seller, the date and nature of the transaction and any other information the Secretary of Treasury determines necessary.
Rubio’s office said the reports would shine light on the effects of money laundering and illicit activity on Miami’s real estate market. The legislation applies to the 15 largest metro areas so real estate purchases in rural communities would not be subject to the same scrutiny. Also included are New York City, Los Angeles and Washington, D.C.
The bill also increases withholding taxes, which are paid at the time a foreign buyer sells the property to another person. There is an exemption if the foreign buyer purchases a home that is under $300,000 and the buyer or a family member resides in the property for more than six months out of the year.
And the legislation creates an additional Low-Income Housing Tax Credit for new single-family home construction, which is defined as a “project of one to four dwellings.” The credits can be used in neighborhoods that meet certain household income and poverty thresholds, which Rubio’s office said encompasses a “significant portion” of the MiamiDade-Fort Lauderdale area.
“The goal of this tax credit is to create a set-aside to help low-income families that live in Miami to afford quality housing that is capable of raising a family,” Rubio’s office said in a statement. “As housing in Miami becomes increasingly unaffordable due to foreign appreciation, Miami residents are pushed out to live further away with longer commutes or unable to purchase quality singlefamily housing because they are outbid by a foreign buyer.”