The first question a foreign buyer should ask isn't "which property?" — it's "how do I hold it?" That single decision, made before closing, determines whether a future sale triggers trapped cash, whether a lawsuit can reach your other assets, and whether your family loses 40% of the property to U.S. estate tax when you die. There is no universally "best" structure; there is only the right structure for your goals. Here is how the main options actually compare.
The Five Real Choices
1. Individual name
Simplest and cheapest, and it preserves a step-up in basis at death (reducing future capital-gains tax). But it offers no liability protection, exposes the property to full U.S. estate tax (only a $60,000 exemption), and forces a Florida ancillary probate at death. Workable for a low-value personal residence — especially when paired with life insurance to cover the estate-tax risk — but rarely ideal alone for higher-value or investment property.
2. U.S. LLC (single-member)
Popular, and genuinely useful for liability protection and privacy. But here's the trap: a single-member U.S. LLC is "disregarded" for federal tax purposes, so the IRS looks straight through it and treats you as owning the U.S. real estate directly. That means no estate-tax protection at all — the property is still a U.S.-situs asset fully exposed to the 40% tax. An LLC is a fine component of a structure, but on its own it does not solve the estate-tax problem.
3. Foreign corporation (a "blocker")
A foreign corporation that owns the U.S. real estate blocks U.S. estate tax: at death you own shares of a non-U.S. company, which are not U.S.-situs. The cost: corporate-level income tax, potential branch profits tax, no step-up in basis, FIRPTA still applies on a corporate sale, and annual compliance. Strong for pure investment property; poor for a home you personally use (using corporate property rent-free creates imputed-income problems).
4. Two-tier structure (foreign corp over U.S. LLC)
The classic investor structure: a foreign corporation owns a U.S. LLC, which owns the property. You get the LLC's liability shield and the foreign corporation's estate-tax blocking, with one extra layer of administration. This is frequently the recommended structure for foreign owners of Florida rental or investment real estate.
5. Trust (irrevocable / two-tier with a trust on top)
An irrevocable foreign trust — sometimes owning a foreign corporation that owns the property — can address estate tax, succession, and probate avoidance simultaneously, and keep the property out of any court process at death. The most flexible for larger holdings and multi-generational planning, at the cost of complexity and setup.
How the Structures Compare
| Structure | Liability shield | Blocks U.S. estate tax? | Step-up at death | Best for |
|---|---|---|---|---|
| Individual name | No | No | Yes | Low-value personal residence (+ life insurance) |
| Single-member U.S. LLC | Yes | No | Yes (disregarded) | Liability/privacy only — not estate tax |
| Foreign corporation | Yes | Yes | No | Investment property |
| Two-tier (foreign corp + U.S. LLC) | Yes | Yes | No | Rental / investment portfolios |
| Irrevocable trust structure | Yes | Yes | Varies | Larger holdings, succession, probate avoidance |
Income Tax on Rental Property
If you rent the property, how the income is taxed matters as much as the structure. By default, U.S.-source rent paid to a foreign person faces 30% withholding on the gross rent — no deductions. Most owners instead make the "effectively connected income" election, treating the rental as a U.S. trade or business, which allows deductions for mortgage interest, taxes, repairs, and depreciation, and taxes only the net income at graduated rates (you file a U.S. return). For an actively rented property, the net election almost always wins.
FIRPTA Doesn't Disappear
No structure makes the U.S. tax on a sale vanish. FIRPTA applies to the disposition of a U.S. real property interest — whether sold by a disregarded LLC (treated as you) or by a foreign corporation. Structures change the mechanics and the rate of withholding, not the underlying obligation to pay U.S. tax on the gain. Plan for it as part of the exit, not as an afterthought.
Personal Residence vs. Investment: The Deciding Question
The single most important fork: will you use the property yourself, or is it an investment?
- Personal/vacation home: corporations are usually wrong (imputed income from personal use). Individual ownership plus life insurance, or an irrevocable trust, tends to fit better.
- Rental/investment: a foreign corporation or two-tier blocker usually fits, accepting the income-tax trade-offs in exchange for estate-tax protection and liability shielding.
Getting this fork wrong is how owners end up with a structure that solves one problem and creates a worse one. It's also why a Florida real estate attorney and a cross-border tax advisor should design it together.
Frequently Asked Questions
Related Reading
- Cross-Border Estate Planning for Florida Property — the estate-tax problem these structures solve.
- FIRPTA Withholding in Florida — the tax on the way out.
- Can a Foreigner Buy Property in Florida? — the buying basics and SB 264.
Structure Your Florida Investment the Right Way
Truestead Law designs and forms the holding structure that fits your goals — liability, income tax, FIRPTA, and estate tax weighed together, coordinated with your tax advisor — before you close, so you're not unwinding the wrong choice later.
International & Cross-Border Practice →This article is for general informational purposes and does not constitute legal or tax advice. The right structure is highly fact-specific and depends on your residency, goals, use of the property, and applicable treaties; tax rules and reporting requirements change frequently. Consult a licensed Florida attorney and a qualified cross-border tax professional. Arthur Simpson, Esq. is licensed to practice law in the State of Florida. Attorney advertising.