FIRPTA Withholding Rules Overview

The Foreign Investment in Real Property Tax Act (FIRPTA) was created by the U.S. Congress in 1980 to insure that Buyer's in the transaction withhold an amount from the Seller's proceeds at closing and remit that to the IRS so that even foreigners are forced to report and pay their fair share of taxes. (Learn more here: What is FIRPTA?

​

The IRS Rules are strict and failure by Buyer, Closing Agent or Realtors if acting as agents, are subject to stiff penalties for failure to strictly comply. For this reason, FIRPTA Refunds most popular service is the Buyer's FIRPTA Closing Package. This provides a simple and affordable method to remove the risk and liability of this most important initial withholding responsibility. Complete with document preparation, acting as paid preparer, providing all forms, affidavits, certifications and instructions to follow, with follow up to insure compliance. 

​

The 3 steps to calculating FIRPTA withholding are simple: Foreign sellers who are not exempt must have FIRPTA withheld. The rate varies at 0%, 10% and 15% depending on the use of the property and price of sale. 

​

​Sale, or Disposition, in terms of the IRS Code (IRC) includes sale, exchange, liquidation, gift, transfers and the like. There is no getting out of it unless lawful exemptions apply.

​

Foreign sellers do not need tax identification numbers to sell and close. They will need these to file for refund. In the case of not having TINs, it is especially important for a U.S. based FIRPTA services provider to act as representative because the IRS will not issue an 8288-A Copy B without these. In this way the IRS has an authorized party to communicate with. Especially helpful when that party, as FIRPTA Refunds does, can apply for the necessary TINs as well as do the various filings.

​

We are very familiar with the special rules for corporations, LLCs, trusts and the like.

 

Once the FIRPTA withholding has been withheld, Sellers can obtain, renew or use their TINs and later file for their tax refunds.

 

FIRPTA Refunds has decades of experience and the 10 products and services needed to carry out all FIRPTA matters. If you have questions, please contact us for speedy reliable and informed answers.