FIRPTA 1445
The Foreign Investment in Real Property Act, is tax law that ensures that foriegn entities pay income tax on any real estate sold in the United States. Unless you are familiar with this law, it can be confusing and hard to navigate. At Title One Settlement, we have specialists who understand the nuances associated with FIRPTA 1445. With numerous withholdings at both state and federal level, as well as exemptions available to the seller, feel confident knowing that we are here to ensure a smooth, easy transaction on your behalf.
As we said, there are several aspects to keep in mind when trying to report the sale of your property as a foreign seller. Federal withholdings require sellers to hold 15% of the sales price as a deposit to the IRS.
Serving as a deposit to cover the applied taxes owed on the sale or transfer of the property, if the actual taxes are calculated to be less than 15%, the seller will receive a refund of the difference. In the case where no taxes are owed on the sale or transfer, the entire deposit will be refunded to the seller. Whereas federal taxes are always owed, it can vary from state to state. We at Title One Settlement, can help guide you through this process based on what state you are in. Lastly, as with all federal tax law, there are exemptions to consider.
Certain circumstances may help make your sale exempt, such as these listed below.
The sales price is less than $300,000 and the buyer has definite plans to reside in the home for at least 50% of the first 24 months that the property is being used by any person