buying resale "international seller"

[mab2012]

Maybe the sticking point is that I'm talking about notarization by an accredited US notary in Canada as required for DVC financing and other US real estate or mortgage transactions, and you're talking ONLY about selling contracts? I would imagine that would be more flexible, as I was talking about both buying and selling.

Could be. The original question I was responding to was specifically in reference to DVC contracts sold by Canadian residents, so that was the context we started with. I definitely wasn't commenting on requirements for financing. I don't disbelieve that there might be regional variation in regulations in the more general sense.

I sold my contract a few months ago and used a local notary (Montreal, Quebec) and had no issues whatsoever with either the title company or the buyers..

I think a person only has to go to the US Embassy if the documents are required to be notarized under the Apostille Convention.
https://en.wikipedia.org/wiki/Apostille_Convention

I have bought and sold multiple properties in the US, I have never been asked by any of the title companies that requires me to have the document notarized by someone who was recognized under the Apostille Convention. So it was always notarized by a regular lawyer. The only time I had to have my signatures notorized by someone recongized under the Apostille Convention was to apply for an ITIN with the IRS.

Thanks for these comments; firsthand accounts are helpful.

 

[skyywalker]

We bought resale from a seller from the UK and closed in September. My understanding was that I wouldn't have any kind of tax issues as the title company would submit the proper information to the IRS and the seller was responsible for the taxes. Today we received a letter from the IRS stating we owe $442 which must be paid in 20 days. Anyone else have this happen to them?

 

[goofy78]

We bought resale from a seller from the UK and closed in September. My understanding was that I wouldn't have any kind of tax issues as the title company would submit the proper information to the IRS and the seller was responsible for the taxes. Today we received a letter from the IRS stating we owe $442 which must be paid in 20 days. Anyone else have this happen to them?

Does the letter say what it's for specifically? I assume you're going to talk to someone before paying it. Could you please come back and post after you find out what it's for? I just closed with a Canadian seller and am hoping I don't receive something similar.

 

[Disney Dad ADL]

We bought resale from a seller from the UK and closed in September. My understanding was that I wouldn't have any kind of tax issues as the title company would submit the proper information to the IRS and the seller was responsible for the taxes.

That's not exactly true. Technically You as the buyer are responsible for FIRPTA withholding. If for some reason it isn't done and the foreign seller does not pay taxes, it becomes your problem. That being said, usually the title company submits the forms and taxes to the IRS for you and takes the money out of the you already paid. They should be able to supply you a copy of form 8288 and 8288A which prove you already withheld the proper amount.

Today we received a letter from the IRS stating we owe $442 which must be paid in 20 days. Anyone else have this happen to them

Not sure exactly without knowing what's on the letter, but it's possible that the seller asked the IRS if the withholding amount could be decreased from the standard 15% . The title company holds the money until they hear back from the IRS, then submits the 8288/8288A. This is what happened to us. We received a letter from the IRS asking for $2000 or so about 4 months after closing, and the title company submitted the appropriate amount and provided me a copy of the 8288/8288A as proof. Just check with your title company, they should be able to clarify.

 

[skyywalker]

I plan to call the title company first thing tomorrow morning. I'll follow up with you guys as soon as I get some answers.

 

[skyywalker]

I spoke to our closing agent at the title company yesterday and she ensured me that they would take care of paying the IRS. She said she's just waiting to receive the letter from the IRS. But again, we owe nothing as far as taxes go.

 

[rothesay]

I am in the unfortunate position where I received the dragged letter from the IRS as the seller did not file their form 8288 correctly and have ignored the IRS for additional information.

It has been a couple of days since I forward IRS' letter to the title agent. And so far, the title company is some what unresponsive. So am I stuck with the tax bill or is there any recourse where I can somehow recover the money from either the seller or the title company?

Thanks!

 

[Disney Dad ADL]

I am in the unfortunate position where I received the dragged letter from the IRS as the seller did not file their form 8288 correctly and have ignored the IRS for additional information.

It has been a couple of days since I forward IRS' letter to the title agent. And so far, the title company is some what unresponsive. So am I stuck with the tax bill or is there any recourse where I can somehow recover the money from either the seller or the title company?

Thanks!

Sorry, I don't understand the situation exactly. You are a U.S. buyer and the seller is international?

If that's the case, it doesn't really affect you. You need to make sure that you submitted the 8288 (double check with the title company, but it should have been in the closing docs you filled out). The withholding comes out of the money that you paid already. If the seller doesn't file, then he is basically losing 15% of the total price.

So if the purchase price was $10000, then you write a check for $10000 to the title company. The title company sends $1500 from your $10000 to the IRS along with your 8288. The seller needs to file US taxes to reclaim his $1500.

 

[rothesay]

Sorry, I don't understand the situation exactly. You are a U.S. buyer and the seller is international?

If that's the case, it doesn't really affect you. You need to make sure that you submitted the 8288 (double check with the title company, but it should have been in the closing docs you filled out). The withholding comes out of the money that you paid already. If the seller doesn't file, then he is basically losing 15% of the total price.

So if the purchase price was $10000, then you write a check for $10000 to the title company. The title company sends $1500 from your $10000 to the IRS along with your 8288. The seller needs to file US taxes to reclaim his $1500.

The sellert is international. According to the IRS letter, it states the seller did not completely filled out 8288-B and they have ignore their request for additional information. So they have denied the seller request to reduce the withholding amount. And now, they are asking me to submit form 8288 along with the amount withheld.

I suspect the title agency did not validate the completeness of the 8288-B and did not withhold the proper amount or non at all, thus, they are avoiding me. Therefore, it is very possible that I will have to pay that 15% on top of the purchase price as the transaction already close 4 months ago. To me, this sounds like negligence on the part of the title company. Do I have any recourse if the title company did not properly with hold the amount?

 

[Wakey]

The sellert is international. According to the IRS letter, it states the seller did not completely filled out 8288-B and they have ignore their request for additional information. So they have denied the seller request to reduce the withholding amount. And now, they are asking me to submit form 8288 along with the amount withheld.

I suspect the title agency did not validate the completeness of the 8288-B and did not withhold the proper amount or non at all, thus, they are avoiding me. Therefore, it is very possible that I will have to pay that 15% on top of the purchase price as the transaction already close 4 months ago. To me, this sounds like negligence on the part of the title company. Do I have any recourse if the title company did not properly with hold the amount?

I'm a UK lawyer, not a US lawyer but I suspect they must owe you a duty of care. In the UK a conveyancer/ lawyer (each party has their own on property trsnsacations) would likely be negligent for failing to ensure taxes were paid. I'd threaten them with going to a lawyer in 7 days if you haven't heard back.

 

[Disney Dad ADL]

The sellert is international. According to the IRS letter, it states the seller did not completely filled out 8288-B and they have ignore their request for additional information. So they have denied the seller request to reduce the withholding amount. And now, they are asking me to submit form 8288 along with the amount withheld.

I suspect the title agency did not validate the completeness of the 8288-B and did not withhold the proper amount or non at all, thus, they are avoiding me. Therefore, it is very possible that I will have to pay that 15% on top of the purchase price as the transaction already close 4 months ago. To me, this sounds like negligence on the part of the title company. Do I have any recourse if the title company did not properly with hold the amount?

Double check with your title company, but I think you should be OK. I believe typically the title company does not disperse the funds to the seller until the IRS exemption is verified. This is what happened in our case.

We are a US buyer, international seller (Canada if it matters). Our seller requested a decreased withholding amount. I filled out an 8288 and 8288-A around closing time that reflected the decreased withholding. Our contract closed without issue.

About 3 months after closing, we received a letter from the IRS that they received the 8288-B (which I know is a bit different than your case) stating that the withholding was reduced to $2000 or so and requested that we submit an 8288 and 8288-A. I was a little concerned because I thought we already did it. So I contacted our title company. She said that she hadn't received the letter yet, but when she did, she would submit our 8288 and 8288-A (which we had filled out at the time of closing) along with the funds. In other words, she didn't submit our 8288 or 8288-A until AFTER she received the exemption approval from the IRS, which again was 3 months after closing.

In your case, the IRS is just saying that they didn't receive anything so they require the full withholding. I believe the title company should still be holding the money and should be able to give the IRS the full 15%.

As long as the title company still has the money, it shouldn't be a problem

 

[Disney Dad ADL]

To add to my previous post, here is a snippet of the letter I got from the IRS. I suspect something similar to yours?

 

[DizneyNut65]

I am currently buying from a international seller, but mine is south of the border. Has anyone ever bought resale from that way and if so, did it take longer than say from north of the border or even across the big pond?