Corporate Transparency Act
Call +1 (863) 968-1010
Specialist support with FIRPTA withholding on real estate transactions.
Call us or contact us today.
The tax withholding on home sales by foreign sellers is commonly known as “FIRPTA withholding,” in accordance with the 1980 Foreign Investment in Real Property Tax Act. Under this act, the Closing Agent will withhold 15 percent of the gross sale proceeds at closing. This amount serves as a preliminary payment towards any potential taxes that may arise from the sale of the property. The actual tax due will be determined upon filing a U.S. income tax return for the year in which the property was sold. If the actual tax is higher than the amount withheld, additional tax will be owed upon filing the return. If the actual tax is lower than the amount withheld the IRS will issue a refund for the difference.
If you are a foreign person selling a U.S. property or purchasing a U.S. property from a foreign person, the Foreign Investment in Real Property Tax Act (FIRPTA) may apply to you. For many foreign sellers, FIRPTA is the most complicated aspect of owning a U.S. real estate interest. This is because a significant amount of money must be withheld at closing and there may be confusion about what happens to that money after closing.
Even though FIRPTA is typically linked to the sale of U.S. property by a foreign individual, it is the buyer who carries the legal responsibility to handle FIRPTA correctly. Therefore, whether you are a buyer or seller of U.S. real estate, it is essential to comprehend your duties and tasks.
Each FIRPTA case is unique, and the best approach varies depending on factors such as the IRS processing time, the time of the property sale, availability of ITINs, and the urgency of accessing proceeds from the sale.
Our team of experienced FIRPTA specialists are dedicated to guiding buyers and sellers of U.S. real estate through the process, providing expert advice on IRS processing timelines and assisting with ITIN applications when necessary. With a focus solely on FIRPTA transactions, our team has established close relationships with the IRS, enabling us to effectively and efficiently resolve any FIRPTA-related issues that may arise.