Buying from international seller?

[Renee H]

Ive seen listings where they BOLD “INTERNATIONAL SELLER”. Can anyone tell me what are the implications/details when buying from international sellers? Does Disney shy away from these? Is there additional costs to buyers? Any info would be appreciated!

 

[Bing Showei]

The biggest issue you’ll likely run into with an international seller is the ease with which the seller will be able to secure a notarized signature. For a lot of countries, this will involve going to the local consulate. This MAY add time to closing.

An additional area of potential concern is FIRPTA, which is the Foreign Investment in Real Property Tax Act. Essentially, foreign entities are required to pay a pretty hefty capital gains tax on all property sold. They then have to file documentation to prove it if they didn’t in fact have any realized gains. But the hitch is that the BUYER (when American) is technically responsible for that capital gain, and the IRS will come after you to make sure that’s paid.

The title company can handle all the FIRPTA paper work and collect the capital gains from the sale (from the seller’s net proceeds) on behalf of the buyer and file an 8288. The seller then has to prove to the IRS they didn’t owe capital gains to get that money back.

In theory, FIRPTA should be painless, but there are horror stories out there about the IRS hounding buyers for he money even though the papers were filed.

 

[Bing Showei]

Oh, and Disney doesn’t care whether the seller is from the States or Mars. If the price is right, they’ll buy it back.

Besides potential longer closing times and FIRPTA, there are no costs to the buyer that would differ from buying from a seller in the States.

 

[Renee H]

Oh, and Disney doesn’t care whether the seller is from the States or Mars. If the price is right, they’ll buy it back.

Besides potential longer closing times and FIRPTA, there are no costs to the buyer that would differ from buying from a seller in the States.

I recently had a broker tell me Disney never buys these because of the potential of “horror stories” that you mention. He mentioned something around a 15% tax they didn’t want to pay... I’m assuming it’s that gain you’re mentioning.

 

[Bing Showei]

I recently had a broker tell me Disney never buys these because of the potential of “horror stories” that you mention. He mentioned something around a 15% tax they didn’t want to pay... I’m assuming it’s that gain you’re mentioning.

Yeah, not buying it. Disney wouldn't have to pay anything. No buyer would. The money is withheld from the seller (often stipulated so in the contract).

I doubt Disney's army of accountants would have any issues going toe-to-toe with the IRS.

 

[Bruin_mouse]

My broker didn't disclose in the listing that it was a foreign seller (Canada). When I found out, I was a little bit concerned after reading the FIRPTA horror stories here and on another board. In case you're not familiar, FIRPTA requires foreign sellers to pay taxes on the sale of their property upfront. If they fail to do that the IRS comes after the buyer for the taxes. I asked the escrow agent about it and she assured me she would make the proper withholdings from the sellers' proceeds. I still haven't heard from the IRS, so knock on wood. Timeline wise mine my purchase was great, however, I believe attorneys in Canada can get certified to be US compliant notaries; that may not be the case in other countries where the only US compliant notaries are in the embassy.

One specific horror story I read that sticks out in my mind is one where a buyer was stuck with all the FIRPTA related costs because the escrow company said in the contract the buyer had agreed to pay all closing costs. If you are knowingly going to make an offer to an international seller, I would say in your offer you specify they pay closing costs and offer maybe $500 or so more total, which is the normal amount for closing costs on most contracts. In my case the sellers paid closing costs even though in my initial offer (not knowing they were international sellers) I had said I would. I think they did it specifically to avoid any FIRPTA closing cost disputes. That was a nice, unexpected bonus for me. Good luck!

 

[Renee H]

My broker didn't disclose in the listing that it was a foreign seller (Canada). When I found out, I was a little bit concerned after reading the FIRPTA horror stories here and on another board. In case you're not familiar, FIRPTA requires foreign sellers to pay taxes on the sale of their property upfront. If they fail to do that the IRS comes after the buyer for the taxes. I asked the escrow agent about it and she assured me she would make the proper withholdings from the sellers' proceeds. I still haven't heard from the IRS, so knock on wood. Timeline wise mine my purchase was great, however, I believe attorneys in Canada can get certified to be US compliant notaries; that may not be the case in other countries where the only US compliant notaries are in the embassy.

One specific horror story I read that sticks out in my mind is one where a buyer was stuck with all the FIRPTA related costs because the escrow company said in the contract the buyer had agreed to pay all closing costs. If you are knowingly going to make an offer to an international seller, I would say in your offer you specify they pay closing costs and offer maybe $500 or so more total, which is the normal amount for closing costs on most contracts. In my case the sellers paid closing costs even though in my initial offer (not knowing they were international sellers) I had said I would. I think they did it specifically to avoid any FIRPTA closing cost disputes. That was a nice, unexpected bonus for me. Good luck!

Wow... good to know. That’s a good tip about the closing costs too

 

[sndral]

For my contract from sellers in the U.K. last year I had to supply my social security number (so the IRS would know who to come after if the sellers/escrow co. didn’t pay/file the correct forms) and it took a little longer for her Majesty’s mail to reach the USA, but the international sale actually went faster than my first contract which had USA sellers that were a divorcing couple living in 2 different states.

 

[Cyberc1978]

I never really understood the notarizing part. I’m international and I have sold a US timeshare previously (hgvc) and I wasn’t required to get anything notarized. I just signed the deed and contract and then that was it.

The closing company had on beforehand gotten a copy of my drivers license for identity check.

Had I been required to go to the US embassy I would have done that, don’t know how much longer that could have prolonged the process.

Just of our curiosity IF I as some point needed to sell and get the documents notarized couldn’t I just travel to the US and get it done there?

 

[montrealdisneylovers]

I never really understood the notarizing part. I’m international and I have sold a US timeshare previously (hgvc) and I wasn’t required to get anything notarized. I just signed the deed and contract and then that was it.

The closing company had on beforehand gotten a copy of my drivers license for identity check.

Had I been required to go to the US embassy I would have done that, don’t know how much longer that could have prolonged the process.

Just of our curiosity IF I as some point needed to sell and get the documents notarized couldn’t I just travel to the US and get it done there?

Yes. We added our adult daughters to our deed several years ago. Although Disney waives ROFR in this circumstance we still had to go through “sale” and “purchase” transactions. Being Canadian, we needed to get our sale papers notarized. I learned from the title company that we could simply cross the border and use a “public notary”. UPS stores seem to have them readily available (at least in Vermont). We drove down, got the papers notarized and mailed back in one easy stop! We would do that again if ever we sold.