WHAT IS FIRPTA
Foreign Investment in Real Property Tax Act
FIRPTA (Foreign Investment in Real Property Tax Act) is a U.S. federal law that requires tax withholding when a foreign person sells real estate in the United States. Its purpose is to ensure the IRS collects any taxes owed on the sale of U.S. property by foreign sellers.
Who Does FIRPTA Apply To?
FIRPTA applies when the seller is not a U.S. citizen or permanent resident. If FIRPTA applies, the buyer is legally responsible for withholding and sending the tax to the IRS unless an exemption applies.
How Much is Withheld?
In most cases, FIRPTA requires withholding 15% of the gross sales price. However, in certain situations, the withholding can be 10% instead of 15% when the buyer will use the property as a personal residence and the purchase price meets IRS limits. This is a withholding, not the final tax. The seller may later receive a refund if less tax is owed.
Are There Exemptions or Reductions?
FIRPTA may not apply or may be reduced if the seller provides a valid Non-Foreign Affidavit, the buyer qualifies for the personal residence exemption, the seller obtains an IRS Withholding Certificate, or other IRS exceptions apply.
How Does PRONTO TITLES Help?
PRONTO TITLES guides Buyers, Sellers, Realtors, and CPAs through the FIRPTA process by determining if FIRPTA applies, preparing the required forms, coordinating with tax professionals, and ensuring proper withholding and IRS submission.
Why is FIRPTA Important?
Failure to comply with FIRPTA can result in penalties, interest, and liability for the buyer. Working with PRONTO TITLES helps protect everyone involved.
Simple Summary
FIRPTA requires tax withholding when a foreign person sells U.S. real estate. The standard withholding is 15%, but in some cases it can be 10% when the buyer will use the property as a personal residence. For more information or assistance with FIRPTA transactions, please contact PRONTO TITLES.
FIRPTA (Foreign Investment in Real Property Tax Act) is a U.S. federal law that requires tax withholding when a foreign person sells real estate in the United States. Its purpose is to ensure the IRS collects any taxes owed on the sale of U.S. property by foreign sellers.
Who Does FIRPTA Apply To?
FIRPTA applies when the seller is not a U.S. citizen or permanent resident. If FIRPTA applies, the buyer is legally responsible for withholding and sending the tax to the IRS unless an exemption applies.
How Much is Withheld?
In most cases, FIRPTA requires withholding 15% of the gross sales price. However, in certain situations, the withholding can be 10% instead of 15% when the buyer will use the property as a personal residence and the purchase price meets IRS limits. This is a withholding, not the final tax. The seller may later receive a refund if less tax is owed.
Are There Exemptions or Reductions?
FIRPTA may not apply or may be reduced if the seller provides a valid Non-Foreign Affidavit, the buyer qualifies for the personal residence exemption, the seller obtains an IRS Withholding Certificate, or other IRS exceptions apply.
How Does PRONTO TITLES Help?
PRONTO TITLES guides Buyers, Sellers, Realtors, and CPAs through the FIRPTA process by determining if FIRPTA applies, preparing the required forms, coordinating with tax professionals, and ensuring proper withholding and IRS submission.
Why is FIRPTA Important?
Failure to comply with FIRPTA can result in penalties, interest, and liability for the buyer. Working with PRONTO TITLES helps protect everyone involved.
Simple Summary
FIRPTA requires tax withholding when a foreign person sells U.S. real estate. The standard withholding is 15%, but in some cases it can be 10% when the buyer will use the property as a personal residence. For more information or assistance with FIRPTA transactions, please contact PRONTO TITLES.
