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Property bargains in Florida may not be all they seem

While estate agents believe prices are now bottoming out, others point out that buyers in Florida need to take taxes, insurance costs and issues like natural disasters into account as they all add to the cost of a property investment.

Marc Rasmussen, a realtor with SKY Sotheby's International Realty in Sarasota, on Florida's western coast said he has seen a jump in interest among international buyers as prices are bottoming out. 'There's a lot of activity from Canada and Europe because of the strength of the currencies,' he said.

'The values of properties have come down 35%, some even 40% from the highs of 2005. In conjunction with the weak currency, it's a pretty good time to be a buyer,' he added.

Over on Florida's east coast, realtor Kimberly Kirschner agrees prices are close to hitting bottom. Her firm, Kirschner Realty International Inc. in Hollywood, north of Miami, is targeting buyers from Canada, Europe, and South America.

Prices in the area are running 20 to 40% below the frenzy of speculative buying a few years ago. There are signs that sales are picking up and she thinks prices of sought-after waterfront homes will be the first to recover, making this the prime time to jump in.

But an organisation in Canada, the Canadian Snowbirds Association, a lobby and information group for people spending significant time in the US each year, is warning that Florida is the only state in the US with a two-tiered property tax system that has different taxes for residents and non-residents.

'People are very excited about the sub-prime mortgage fiasco,' said Lawrence Barker, the Association's executive director. 'But we are cautioning people about buying in Florida because of the two-tiered property-tax issue.'

Tax specialist Tannis Dawson of the Investors Group said prospective overseas buyers should be aware that over the years of their investment currency rates could go the other way. 'You're paying in US dollars but your sources of income are in another currency. What if that currency goes down?' she said.

Other issues include paying taxes on rental income from a US property and on the proceeds of any sale. Non-residents are also subject to US estate taxes at death on the fair market value of any assets.

Insurance against flood, hurricanes and other disasters may be required, adding to costs. And if you happen to be in the path of a tornado, flood or other natural disaster common to some states, don't expect the government to help. Disaster relief in the US is not available for holiday properties, only primary residences.

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