Contracts that have been available for a bit

[kboo]

Interesting. I don't think we ever got a letter from the IRS about this when we bought from international sellers. However, we used Vacatia, and they assured me that the 15% is withheld from the proceeds paid to the seller. Their title company is known as one of the good ones, and I was told multiple times this would be handled appropriately. OTOH, this was all last year, and we never got a letter from the IRS saying we owed them money either. They love to send us letters all the time about how one "i" wasn't dotted or a "t" wasn't crossed, so I am cautiously optimistic this was handled correctly. We do our own business taxes and got a letter last week saying that we didn't owe any money but Quickbooks was systematically submitting things that were off by one day, so we needed to call them. Yeah...

this is us, too - even though we have a paid preparer. So I ripped open the letter from the IRS thinking it was one of those "you missed this thing on your 2015 return..." Was not even expecting the letter from the IRS about FIRPTA, but I was just thankful it wasn't something telling us we owed more $!

 

[Scat5]

Yes, and they have to go to a US embassy to sign and there is a foreign tax issue to be satisfied.

Bill

That's actually incorrect. I'm an International seller (Europe) and have just sold 3 contracts. All I had to do was get them notarized locally, my broker is withholding 15% of the sale price, most if not all of which, I'll get back when I complete the necessary US tax forms. This however is done after the sale has closed so in no way affects the buyer and doesn't delay closing in any way. All documents have been emailed to me and I've scanned and sent them back the same day. The only "delay" was getting notarized documents as they have to be sent back to the USA but I used DHL and they were back in two days. I believe on two of the contracts I'm waiting for my buyers to complete their end of the deal.


I think there's too much scaremongering about international sellers, as long as you're dealing with a reputable resale company who will ensure that the 15% FIRPTA tax is withheld there is no issue. Having followed the ROFR thread there seems to be more issues with shady practices amongst American sellers, I've seen a couple of posts where points have disappeared after contracts have been signed and before closing.​

 

[Scat5]

I'm from UK, there's no issue with buying from us, we just need to get it notarized. The tax issue, the agent will know, 15% to be held back. It's then the seller's problem to sort it out (tax experts the brokers know will sort it out and get most back for about $500). The only thing to concern yourself with buying from an International Seller is ensuring the contract says the 15% will be held back to satisfy the liability andthe closing agent does this. It may or may not take longer. I could get docs back in 48 hours. I agree, probably less likely to ROFR.

Again, not really correct. None of my contracts mentioned withholding of tax, I was advised of it upfront and it was listed in my closing statement. As long as a buyer deals with reputable brokers then it's not an issue. Also being an international seller makes no difference to ROFR, all 3 of my contracts passed yet a contract at a higher price for similar points was taken

 

[Wakey]

Again, not really correct. None of my contracts mentioned withholding of tax, I was advised of it upfront and it was listed in my closing statement. As long as a buyer deals with reputable brokers then it's not an issue. Also being an international seller makes no difference to ROFR, all 3 of my contracts passed yet a contract at a higher price for similar points was taken

I totally agree with you, no reason not to buy internationally, it makes no difference to the seller.
But in the initial agreement (either in the 'contract' that's drawn up or in writing from the broker) as a buyer I'd want it confirming that 15% is being retained for payment of the tax.
I also agree as long as you deal with a reputable broker and title agent it's no issue and people should be just as happy to buy internationally.

 

[kboo]

Only additional wrinkle in my case was that my sellers had to come up with $ to close, so that added to the delay in my case.

 

[Scat5]

Only additional wrinkle in my case was that my sellers had to come up with $ to close, so that added to the delay in my case.

Just curious as to why the sellers needed $$ to close. My only expenses so far has been to get the documents notarized and to send them back to the USA which I did in my own country /currency. When the buyer has paid for the contract and it closes the title company will make all the deductions and then send me the balance. Are you sure it just wasn’t a title company delay and they just blamed the seller?

 

[sndral]

Just curious as to why the sellers needed $$ to close. My only expenses so far has been to get the documents notarized and to send them back to the USA which I did in my own country /currency. When the buyer has paid for the contract and it closes the title company will make all the deductions and then send me the balance. Are you sure it just wasn’t a title company delay and they just blamed the seller?

Many owners finance their purchase and have a loan/motgage that must be satisfied from the sale proceeds. The broker also gets a % of the sale price as their commission. There may be maintenance fees owed as well. Sometimes those items add up to more than the buyer is paying - in essence the seller is ‘upside down’ on their DVC and must provide cash over and above what the buyers are paying to pay off their obligations.

 

[kboo]

Just curious as to why the sellers needed $$ to close. My only expenses so far has been to get the documents notarized and to send them back to the USA which I did in my own country /currency. When the buyer has paid for the contract and it closes the title company will make all the deductions and then send me the balance. Are you sure it just wasn’t a title company delay and they just blamed the seller?

What @sndral said. They also couldn't go below a certain purchase price because then they wouldn't have had enough to pay off their mortgage and associated fees.

 

[Wakey]

This is why it's not a good idea to buy luxury discretionary purchases on the tick!

 

[Scat5]

What @sndral said. They also couldn't go below a certain purchase price because then they wouldn't have had enough to pay off their mortgage and associated fees.

Wow, I didn’t even think of that. I bought my contracts outright about 12 years ago so that wasn’t something I was aware of. Glad your contract went through OK