FIRPTA TAX FOR NON RESIDENT ALIEN FOREIGN PERSON
SELLING U.S.A.PROPERTY
What is FIRPTA?
FIRPTA stands for Foreign Investment in Real Property Tax Act and it is the Federal law governing the taxation &
withholding by foreign persons selling US real estate.
Under FIRPTA, the buyer is required to withhold either 10% or 15% of the gross sales price from proceeds as a
“deposit” due to IRS within 20 days after closing; when purchasing from a foreign seller (See below certain
exceptions apply).
A “foreign person” is defined under FIRPTA includes all of the below:
Foreign Nationals Citizens/Nonresident alien individual,
foreign estate.
foreign corporation,
partnership,
trust
Can I avoid the FIRPTA withholding in a legal way?
Yes, If the exemption conditions are met(See below) affidavit can be executed by an “eligible” buyer.
Form 8288B (to be done 3 months before the sale/closure ) apply for withholding Certificate may allow a lesser
amount withheld at closing.
FIRPTA Exemptions Conditions/Eligibility includes:(No withholding required under
FIRPTA if below conditions are met:
§ The sales price is $300,000 or less,
and
§ The buyer signs affidavit at or before closing stating they intend to use the property for personal purposes for
at least 50% of time property occupied for each of the first two 12 month periods immediately after closing.
Withholding Certificate to be obtained (Recommend to apply 3 to 4 months prior to sale or closure of the
property with withholding agent/escrow or title company)
The amount of tax required to be withheld under FIRPTA cannot exceed total tax liability. A seller or buyer may
apply for a withholding certificate (IRS Form 8288-B) allowing less than 10% withheld or installment payments.
90 days to issue from receipt of application.
FOR MORE INFORMATION VISIT HERE: https://www.taxandaccountinghub.com/
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