Real-Estate-Buyers-And-Foreign-Real-Estate-Sellers246

							   Real estate buyers and foreign real estate
    sellers should be aware of the FIRPTA
   requirements and how it impacts their tax
                    liability.




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  Foreign real estate investors have plenty to consider when they are
purchasing property in the United States One of the biggest
considerations to be aware of, and one that raises the most
questions, is The Foreign Investment in Real Property Tax Act of
1980, also known as FIRPTA FIRPTA is a tax law created by the
United States Internal Revenue Service (IRS) that requires 10% of
the sale price to be remitted to the IRS if a foreign real estate seller
is involved in the transaction This is important for all foreign real
estate investors to understand, even if they are not yet U S property
owners, because when the time comes that you want to sell your
property, there are several things you need to be aware of in order
for the closing transaction to take place
 FIRPTA Requirements FIRPTA requires any person acquiring real
estate in the U S to collect a withholding tax equal to 10% of the
gross sale price of the property in question if the seller is a foreign
real estate seller or investor In order to be considered a "foreign
person" the seller must be either a nonresident alien individual, a
foreign corporation not treated as a domestic corporation, or a
foreign partnership, trust or estate The funds must be forwarded to
the IRS within 20 days of the closing
 The paperwork, filing and actual remittance of funds can often be
handled by the escrow agency that is used in the property
transaction However, in order for the funds to be properly
forwarded, both the buyer and the seller must have a United State
taxpayer identification number This is significant because not all
foreign real estate investors have a U S taxpayer ID and obtaining
one is not a quick process
 If you do purchase property in the United States with the intent to
sell it, you should begin the process of getting your taxpayer ID
number as soon as possible If you intend to purchase property in
the United States you should understand that in addition to obtaining
a Tax Identification Number or Taxpayer ID Number and you will be
required to file tax returns when you sell the property in order to
comply with FIRPTA Although the buyer cercacasa is responsible
for remitting the FIRPTA payment to the IRS, the foreign real estate
investor must also file a U S tax return
 The withholding agent is required to report the details of the
transaction to the IRS, the buyer will report the purchase to the IRS
and the seller needs to report the sale to the IRS as well In order to
do this, both the buyer and the foreign real estate seller must have a
U S identification number or taxpayer ID Significant penalties can
result for non-compliance or tax avoidance
 There are several exceptions to and exemptions from FIRPTA
Consultation with a qualified attorney or tax accountant is
recommended to determine your particular tax liability under
FIRPTA * This article is for informational purposes only and is not
intended as legal or tax advice Please consult your attorney or
accountant to understand how FIRPTA applies to your situation
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