What is FIRPTA?

by Maria Del Carmen Sanchez

FIRPTA stands for Foreign Investment in Real Property Tax Act, and it was established by Congress back in 1980. This type of tax is unique, because it requires foreign investors to pay a 15% withholding tax to the IRS on the sale of real estate in the US.

And is a term used to describe the taxation of foreign persons on income derived from United States real estate. When a foreign person purchases property in the US, they are responsible for the payment of FIRPTA taxes

It's important for potential buyers to be aware of FIRPTA before making their purchase, as it can have both advantages and disadvantages.

The advantage is that in some cases, it can offer special protection for buyers, since it ensures taxes are paid and the seller must provide proof. However, it can also be disadvantageous as it increases the buyer's cost by 15%.

For buyers who are making an investment in US real estate, they need to be aware of the rules and regulations in order to determine whether they will face any additional expense while purchasing property.

Furthermore, FIRPTA requires that both the buyer and seller disclose information relating to any foreign investment as part of the transaction.

This includes reporting to the Internal Revenue Service on Form 8288, which must be lodged with the relevant taxing authority within 10 days of the closing of the sale.

It is vital that buyers ensure they have all of the necessary documentation to make this filing, including proof that the investor is indeed a foreign person. Finally, note that if a FIRPTA-exempt transaction is taking place, then this must also be disclosed in writing on the settlement documents.

Both parties must understand what constitutes a FIRPTA-exempt transaction in order to take advantage of this status.

In conclusion, when buying or selling a property in the US as a foreign person, it is important to remember that FIRPTA taxes will be due and payable.

Buyers should factor this into the sale price when negotiating and ensure that all necessary documentation is gathered for the IRS filing.

 

 

 

 

Categories

Recent Posts

Sorpréndete: ¿Un embargo no te impide ser propietario de una vivienda?
Sorpréndete: ¿Un embargo no te impide ser propietario de una vivienda?
Opciones de financiamiento para autónomos: Cómo usar tus extractos bancarios para comprar tu casa
Opciones de financiamiento para autónomos: Cómo usar tus extractos bancarios para comprar tu casa
No caiga en estos mitos sobre los agentes en bienes raíces
No caiga en estos mitos sobre los agentes en bienes raíces
Los límites de los préstamos convencionales aumentan: ¿Qué significa para ti cmo comprador de Vivienda?
Los límites de los préstamos convencionales aumentan: ¿Qué significa para ti cmo comprador de Vivienda?
Cómo Calificar para un Préstamo Hipotecario con Ingresos Alternativos
Cómo Calificar para un Préstamo Hipotecario con Ingresos Alternativos
The solution to buy your house, ALL you need to know about a CONSIGNATIVE you need to know about a CONSIGNATORY
The solution to buy your house, ALL you need to know about a CONSIGNATIVE you need to know about a CONSIGNATORY
La solución para comprar tu casa, TODO lo que tienes que saber de un CONSIGNATARIO
La solución para comprar tu casa, TODO lo que tienes que saber de un CONSIGNATARIO
¿Podría una comunidad 55+ ser adecuada para usted?
¿Podría una comunidad 55+ ser adecuada para usted?
Una casa recién construida puede ser más económica
Una casa recién construida puede ser más económica
Want to buy a home but have small debts? I have the solution.
Want to buy a home but have small debts? I have the solution.

GET MORE INFORMATION

Maria Del "Carmen" Sanchez

Agent | License ID: SL3369295

+1(915) 309-6418

Name
Phone*
Message

By registering you agree to our Terms of Service & Privacy Policy. Consent is not a condition of buying a property, goods, or services.