In 1980, Congress enacted the Law on Foreign Investment in Real Property Tax (FIRPTA), 26 USCS 1445. The law states that if a seller of a property is a “foreigner”, the buyer must withhold a tax equal to 10% of the gross purchase price, unless an exemption under the Act.
A “foreign” is a non-resident alien individual, foreign corporation is not treated as a domestic company, foreign company or a company, trust or estate. A resident alien is not considered a foreign person under the Act.
Exemptions to FIRPTA
There are a number of exceptions to FIRPTA. A transaction is exempt if:
- The seller of a property does not give a foreign affidavit stating under penalty of perjury, that the seller is not a foreign person
- The transaction involves the transfer of a property purchased for use as a residence of the buyer and the amount is not more than $ 300,000
- The seller obtains a “qualifying statement” from the Internal Revenue Service, indicating that no restraint is necessary
Legal Counsel for
As part of any sale of real estate with a foreign investor and the seller must take into account a specific agreement with regard to FIRPTA compliance. The experience of a real estate lawyer May be useful. Huggins & Maxwell Ltd transactional lawyers in Las Vegas, Nevada. Have addressed some of the largest real estate transactions in Las Vegas. As always, when the Internal Revenue Service, it is important to proceed with caution, because “prevention is better than cure.”
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1. Tax Guru Says:
November 22nd, 2009 at 9:52 pmI’ve been active in taxations for lengthier then I care to acknowledge, both on the individual side (all my employed life!!) and from a legal viewpoint since passing the bar and following tax law. I’ve supplied a lot of advice and rectified a lot of wrongs, and I must say that what you’ve put up makes complete sense. Please continue the good work – the more people know the better they’ll be outfitted to handle with the tax man, and that’s what it’s all about.
February 5th, 2009 at 10:54 pm
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February 12th, 2009 at 8:48 am
[...] admin placed an interesting blog post on Foreign bInvestment/b in Real Property Tax Act » Attorney ServicesHere’s a brief overviewIn 1980, Congress enacted the Law on Foreign bInvestment/b in Real Property Tax (FIRPTA), 26 USCS 1445. The law states that … [...]