Buying Miami property through an LLC: estate tax and FIRPTA
Buying and investing in Miami from Latin America · Part 5 of 5
Buying Miami property through an LLC deserves attention before signing. Buying individually, with a spouse or through an entity can change administration, financing, succession and tax compliance. There is no single structure suitable for every Latin American buyer.
This guide outlines questions for your attorney and tax advisers. The ownership vehicle should fit the family, intended use and obligations you can maintain through ownership and eventual sale.
Buying Miami property through an LLC: what changes?
A limited liability company is formed under state law. Its federal tax classification depends on factors including the number of owners and elections.
A domestic single-member LLC generally defaults to disregarded-entity treatment for federal income tax unless it elects otherwise. A domestic multi-member LLC generally defaults to partnership treatment unless it makes a different election. Legal form and tax classification are separate questions. Source: IRS single-member LLC guidance.
Forming an LLC does not automatically eliminate rental tax, sale obligations or estate-tax exposure. Nor does it establish anonymity from banks, authorities or closing professionals.
Compare the whole ownership arrangement
Issue | Question to ask |
Intended use and owners | Is this a family home, investment or joint venture? Who contributes capital? |
Financing | Will the lender allow entity ownership and require personal guarantees? |
Administration | Who signs, controls accounts and makes decisions? |
Tax | How is the entity classified in the United States and the owner’s residence country? |
Succession | What happens if an owner dies or becomes unable to act? |
Exit | What happens when the property is sold or title changes? |
Request a written comparison of formation, annual maintenance, accounting, filings, insurance and closing costs. Limited liability has boundaries and exceptions. It does not replace suitable insurance or automatically protect every personal act.
What the 60,000 USD estate-tax figure means
For a decedent who was neither a U.S. citizen nor U.S.-domiciled for estate-tax purposes, certain U.S.-situated assets can fall within the federal estate-tax system. U.S. real estate is part of that analysis.
The IRS describes a general 60,000 USD filing threshold for relevant nonresident noncitizen estates, taking account of U.S. assets and applicable adjustments. It is not a 60,000 USD allowance for each heir, nor a rule that automatically taxes every dollar above the threshold at 40%. Tax is calculated under its own rates, credits, deductions and possible treaty provisions.
The graduated schedule can reach a 40% marginal rate. That should not be used as a flat estimate of a family’s exposure. Nationality, estate-tax domicile, ownership and the nature of assets require individual analysis. Source: IRS estate tax for nonresidents not citizens.
Income-tax and estate-tax treaties are different
Mexico has a U.S. income-tax treaty. That does not make it an estate-tax treaty. Mexico and Colombia are not listed in the IRS estate-and-gift-tax treaty table.
Holding another passport does not by itself establish entitlement to treaty relief. The applicable treaty’s scope and conditions must be examined. Sources: Mexico income-tax treaty documents and IRS estate-and-gift-tax treaties.
Ask advisers to distinguish access to the asset, the succession procedure and tax exposure. Solving one does not establish that the others are solved. A U.S. LLC alone is not a basis for promising elimination of estate tax.
Reporting can arise even without rent
A foreign-owned U.S. single-member disregarded entity may have to file Form 5472 with a pro forma Form 1120 when reportable related-party transactions occur. Certain capital contributions or distributions can matter even before the property earns rent.
Not every LLC files the same returns. Ownership, elections, residence and transactions change the analysis. IRS instructions provide a 25,000 USD base penalty for failure to properly file a required Form 5472, with possible additional consequences. Assign responsibility for the compliance calendar from formation. Source: IRS Form 5472 instructions.
FIRPTA when the property is sold
A sale by a person treated as foreign can require withholding on the amount realized. The buyer is generally the withholding agent. Being a foreign buyer does not remove that responsibility.
General situation | Indicative withholding |
Amount realized up to 300,000 USD and an individual buyer meeting the required residential-use test | A 0% exception may apply |
Above 300,000 USD and up to 1,000,000 USD with the required residential use | A 10% rate may apply |
Above 1,000,000 USD, or no applicable reduction or exception | Generally 15% |
Residential use is subject to a specific test involving days used in the first two 12-month periods. Thresholds are not simply reduced to each co-owner’s share. Entity transactions and other circumstances can have special rules. Have the title professional and tax adviser confirm the treatment. Sources: IRS FIRPTA guidance and withholding exceptions.
For example, a 1,200,000 USD sale subject to the general rule can produce 180,000 USD of withholding even when taxable gain is much smaller. Withholding is a payment toward tax. The return determines final liability and any available refund. Amount realized can include assumed debt and other consideration rather than only cash received.
Coordinate the residence-country analysis
U.S. transparent treatment does not guarantee the same classification in Mexico or Colombia. Income timing, attribution and eligibility for foreign-tax credits can differ.
Coordinate advisers in both jurisdictions before contributing capital or transferring title. Review foreign-asset reporting and tax residence as well. The U.S. substantial-presence test weights days over three years; it is not always a simple 183-day count in one year. Source: IRS substantial-presence test.
Frequently asked questions
Is an LLC always preferable?
No. Intended use, co-owners, financing, family circumstances, ongoing costs and both countries’ tax treatment must be compared.
Can I transfer the property to an entity later?
A later transfer can affect taxes, lending, insurance and association requirements, even without a new cash purchase price. Review the consequences before signing.
What should I take to an adviser?
Tax residence, citizenships, family circumstances, co-owners, source of funds, intended use, financing and expected holding period. Ask for a plan covering acquisition, operation, incapacity, death and exit.
Compare developments with a complete ownership budget
TemploAgency helps you compare Miami developments by location, permitted use, purchase terms and commercial documentation. Tax, legal and lending assessments belong with the relevant qualified professionals. Share your budget and intended use so we can prepare a relevant shortlist.
Want a shortlist tailored to your plans? Contact TemploAgency. Read more in our Miami guides.
Sources checked on October 15, 2026. General information to help prepare a purchase; rules and terms can change. Confirm your transaction’s treatment with qualified advisers in the United States and your residence country.
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