FIRPTA Information

"FIRPTA" Definition: Foreign Investment Property Tax Act:

• Proceeds from rents and sales on U.S. properties by foreign nationals are subject to withholding for U.S. income tax.

• Foreign nationals can purchase U.S. real estate for their own “personal” use without reporting it to the IRS

• Any use other than “personal” must be reported to the Federal, State, Local Governments

Burden of Liability:

• When a foreign national is the landlord: the property manager or tenant must withhold 30% from each payment for taxes
• When a foreign national is a seller: (a) the buyer must withhold tax equal to 10% of the sale price; (b) the buyer and buyer’s closing agent are required to report sale to IRS
• There are civil and criminal penalties for not withholding proper tax

***PLEASE SEEK ADVISE FROM YOUR CPA (Certified Public Accountant) or REAL ESTATE TAX ATTORNEY.***

FIRPTA Links & Articles:

www.irs.gov/pub/irs-utl/firpta.pdf

www.irs.gov/individuals/article/0,,id=120219,00.html

www.aaronline.com/documents/firpta.aspx

IRS Forms

• Form W-7: Application for ITIN Individual Taxpayer Identification Number
• Form 8288: U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interest
• Form 82880A: Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests
• Form 8288-B: Application for Withholding Certificate for Disposition by Foreign Persons of U.S. Real Property Interests. To reduce or eliminate the FIRPTA withholding amount.