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What is FIRPTA?

At Cottrell Tax & Accounting we offer an easy, convenient, and seamless way to close on a property and apply for a ITIN/Withholding Certificate to avoid or speed up the return of the 10% - 15% FIRPTA withholding taxes. 

FIRPTA (Foreign Investment in Real Property Tax Act) requires the buyer of a foreign owed property to withhold 0%, 10% or 15% of the sales price.  If the sales price is under $300,000 and the buyer is willing to sign an affidavit stating that they are going reside at the property for at least 50% for the first 2 years, the withholding is 0%.  If the sales price is over $300,000 but under $1,000,000 and the buyer is willing to sign an affidavit stating that they are going reside at the property for at least 50% for the first 2 years, the withholding is 10%.  All other circumstances the withholding is 15%.

If there is any withholding, the seller has only two options to get the withholding back.  Wait until the following year and file a US tax return, or file a Withholding Certificate.  In most cases it is advantageous to file for the withholding certificate and speed up the process.  To file for a Withholding Certificate, the seller must have a ITIN (Individual Taxpayer Identification Number).  If you do not have one, we can file for one at the same time as the Withholding Certificate, but we must see your passport in person to authenticate it (per the IRS regulations).

 

 

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FIRPTA Taxes