The Winter SnowForeign Investment in Real Property Tax Act (FIRPTA) is a unique tax. It requires the buyer, that’s right, the buyer to withhold from a foreign seller and pay to the Internal Revenue Service (IRS) a tax on a percentage (formerly 10%) of the amount realized (sales price) upon the sale of any U.S. real property.

FIRPTA changed in December, 2015 for those closings on or after 2/17/16. There are some exceptions to the rule and an increase of the tax to 15%.

 

 

  1. If the sales price is $300,000.00 or less, the buyer intends to occupy the subject property and executes a certification of the facts (Buyers Affidavit of Residency, Intent and Price), the withholding rate is 0%.  This exception remains unchanged and was reconfirmed by the PATH Act.
  2.  If the sales price exceeds $300,000.00 but does not exceed $1,000,000.00, the buyer intends to occupy the subject property, and executes a certification of the facts (Buyers Affidavit of Residency, Intent and Price), the withholding rate is 10%.  This exception was newly created.

For all other transactions the withholding rate is 15% unless the foreign seller has obtained from the IRS a written Determination of Reduced or Waived Withholding.

Questions? 702 245 1787. Darren

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