Are you a foreign investor navigating the complexities of U.S. real estate transactions? Understanding FIRPTA (Foreign Investment in Real Property Tax Act) is crucial for your financial success and legal compliance. At George Dimov CPA, we specialize in guiding high-earning professionals and international investors through the intricacies of FIRPTA withholding.
Whether you’re a tech executive with global investments or a finance professional expanding your real estate portfolio, our expert team is here to ensure your transactions are smooth, compliant, and optimized for tax efficiency. Don’t let FIRPTA complications hinder your investment strategy – reach out today for personalized assistance.
FIRPTA, or the Foreign Investment in Real Property Tax Act, is a U.S. tax law designed to ensure that foreign persons pay their fair share of U.S. income tax when selling U.S. real estate. Enacted in 1980, FIRPTA requires buyers to withhold a portion of the sale proceeds when purchasing U.S. real property interests from foreign sellers.
For our international clients in the tech and finance sectors, understanding FIRPTA is essential for making informed decisions about U.S. real estate investments and ensuring compliance with U.S. tax laws.
The standard FIRPTA withholding rate is 15% of the total amount realized (generally the sale price) from the sale. Here’s a quick breakdown:
FIRPTA withholding applies in various situations, including:
Certain exemptions exist, such as when the property is acquired for use as a residence and the sale price does not exceed $300,000.
The standard FIRPTA withholding rate is 15% of the total amount realized (generally the sale price) from the sale. Here’s a quick breakdown:
As a buyer of U.S. real estate from a foreign person, your key responsibilities include:
While the standard withholding rate is 15%, there are exceptions:
Our team at George Dimov CPA can help you navigate these exceptions and ensure full compliance while optimizing your tax position.
As a foreign seller of U.S. real estate, your main responsibilities are:
To reduce or eliminate the withholding amount, sellers can apply for a withholding certificate using Form 8288-B. This is particularly useful for our high-earning clients who may have a tax liability lower than the standard withholding amount due to expenses, losses, or treaty benefits.
After the sale, foreign sellers must file a U.S. income tax return (typically Form 1040NR for individuals) to report the sale and pay any additional tax due or claim a refund of over-withheld amounts.
With years of experience serving high-earning professionals in the tech and finance sectors, our team at George Dimov CPA offers:
President
Senior Tax Manager
Senior Accountant
Senior Tax Manager
Dimov Tax is rated 5 stars on all major review platforms including Google, Yelp, Facebook, Angie’s List, Better Business Bureau, TaxBuzz, Thumbtack, Upwork, Bark, and much more.
The seller must apply for an ITIN (Individual Taxpayer Identification Number) using Form W-7. Our team can assist with this process.
Yes, by applying for a withholding certificate using Form 8288-B. This is often beneficial for high-value transactions.
The IRS typically processes withholding certificates within 90 days, but delays can occur. Planning ahead is crucial.
Penalties include liability for the full tax amount plus interest, and up to $10,000 for willful non-compliance. Working with experienced professionals like George Dimov CPA is the best way to ensure compliance and avoid penalties.
Need more specific guidance? Contact us for personalized assistance with your FIRPTA-related questions.
Call us today at (866) 681-2140, email us at info@dimovtax.com, or fill out the form and we’ll get in touch immediately.
"*" indicates required fields
