The recent Fed rate cut will enable the development of certain businesses that had been suspended since the pandemic years. This is a particularly relevant boost for the real estate sector in the state of Florida and for Latin investors.
In the heart of the skyscrapers of Brickell Avenue, Miami's bustling financial district, old and new Latin American investors are trying to make their mark.
There is also the office of Bruzzone and Gonzalez (B&G), a Chilean law firm that decided a few years ago to plant its flag on American soil. Its mission: to be the bridge that connects Latin American entrepreneurs and investors with the coveted North American market.
It has been three months since B&G, in a strategic move, joined forces with BlackTORO Global Wealth Management, an investment management firm based in the United States. This alliance seeks to offer a comprehensive service to Latin American investors who wish to diversify their portfolios in the US market.
"We have come here to provide our clients with comprehensive advice and to make our office a kind of one-stop-shop for their investment ideas," acknowledges Chilean lawyer Paola Bruzzone, founding partner of B&G , from her office in Miami.
This alliance with BlackTORO - an Argentine firm that officially landed in Chile on October 2 to advise local investors - provides a comprehensive solution for international investors seeking the best opportunities to protect their assets globally," explains Bruzzone.
"We enable the implementation of optimal investment strategies, simplifying their implementation, administration and management at the level of international tax compliance," says the lawyer.
B&G's decision to set up in Miami was simply a testament to the fact that the most famous city in Dade County, Florida, remains a magnet for Latin American capital that has not lost its appeal. Its strategic location, favorable climate and vibrant cultural scene have made it the preferred destination for those seeking to diversify their investments outside their home countries.
"For Chilean investors, the United States has always been attractive. Companies and family offices , individuals with assets, are obviously always looking, today in a globalized world, before the pandemic, before the outbreak, to see what is happening and where their best alternatives are," explains Bruzzone.
The firm, which has seen 20% annual growth in its U.S. operations, did not conquer the North American market alone.
“The United States, and Miami in particular, has become an incredible investment center. Miami has become a financial center and we expect to continue to see exponential growth in the next five years in terms of providing services and advice to investors,” he said.
LESS TAXES… AND LESS FEES
Florida's tax competitiveness is part of the southern state's enduring appeal.
As in every Republican territory – state governor Ron DeSantis and Miami mayor Francis Suarez are both Trump supporters – taxes are lower than in other US hubs such as California or New York. Thus, unlike other states where residents have to pay a percentage of their annual income, Florida does not levy any personal income tax.
This means that your personal income, whether from your salary, investments or other sources, is not subject to state taxes.
According to the information site Prodeszk, starting in 2024, corporations in Florida (CORP) are subject to a 5.5% tax rate on their income (LLCs are not affected). However, there are several deductions and exemptions that can reduce the effective tax burden for many companies.
Additionally, Florida offers several tax credit programs to encourage investment in certain areas, such as research and development, renewable energy, and job expansion.
While there is a property tax on homes, the average effective property tax rate in the state is 0.80%, which is lower than the U.S. average (0.99%). The typical homeowner in Florida pays about $2,338 annually in property taxes, although that amount varies widely between counties.
However, for a Chilean investor, the appeal has grown since this year: the recent approval of the agreement that avoids double taxation between Chile and the United States has been another factor that has boosted the interest of these South American investors.
Although it is too early to assess the full impact, Bruzzone notes that "there is an opportunity for both sides, both for American investment in the United States and for investors with portfolios in the United States."
And the Fed's decision to lower interest rates by 50 basis points in September for the first time since March 2020, leaving them within the target range of 4.75% to 5%, not only provides assurance that there is greater confidence that inflation is steadily declining, but also makes it possible to boost real estate initiatives that had been on hold awaiting that signal.
And this optimism increases even more if we consider that various analysts predict another similar rate cut before the end of the year.
Despite the positive news, the road to success in the US market is not without challenges.
Bruzzone warns about the importance of having adequate advice before taking the plunge. "You have to be very careful when deciding if you have small, medium, or large assets, where you are going to invest, how you are going to structure yourself," he says. "There were many mistakes made by small investors who said, they got scared after the social outbreak and said 'I'm going to take the little money I have saved,' and soon they realized that there are a lot of restrictions."
B&G is seeking to position itself as an experienced guide in this complex field. With its knowledge of the local market and its understanding of the Latin American mentality, it offers unique added value.
"When there is a Latino behind you who is serving you and explaining how things are, the Chilean, the Colombian, the Peruvian... appreciate it," says Bruzzone.
The lawyer also highlights the stability of the US market as one of its main attractions.
"Chile is now a country with an elected democratic republic, with its rules and legal framework absolutely clear. But, after the social upheaval, there was an opening of more investors, of more people, of more individuals, of more companies, to be able to look at other alternatives in which the legal framework and the assumptions, the stability, obviously have a privilege when it comes to making decisions."
Alongside real estate, the opportunities in the US market are vast and varied. Bruzzone highlights sectors such as mining, agribusiness and financial services as areas of particular interest. "There are mining and agricultural opportunities in other US states," he explains.
B&G does not limit itself to offering traditional legal services. Its comprehensive approach includes investment advice, business structuring and regulatory compliance.
"We provide ongoing advice to clients and we travel to Miami on a regular basis," says Bruzzone, who spends half of each month on American soil. "I have also invested in Miami for more than 15 years. I have seen the evolution of what has happened in terms of the explosive growth that this city has had as a financial center," he adds.
During these trips, Bruzzone oversees the deals in development and, in general, the clients' requirements, "seeking more alliances to allow us to have a fairly expanded portfolio in terms of what we can offer our clients," he says.
The alliance with BlackTORO further strengthens this value proposition.
The investment management firm brings its experience in the US financial market, perfectly complementing B&G's legal and tax expertise. "This will undoubtedly boost Chilean investment in the US," predicts Bruzzone.
The Chilean firm is currently in the midst of developing its real estate arm, “to be able to offer our clients a safe investment in what has to do with Real Estate, with this partnership we have with Property Partners and with BlackTORO and with some of its partners,” explains the lawyer.
Looking to the future, Bruzzone is optimistic. "We believe that this is clearly on the rise. We have a long-term view," the lawyer stresses.
The path to success in the U.S. market can be complex, but with the right guidance and enough capital to invest, the opportunities seem endless. And for Latin American investors willing to take the leap, the American dream seems closer and more alive than ever .
