Cost of selling

[mort1331]

We are thinking of selling one of our contracts. I know about the commission fees, but being from out of country I hear that there is 10% they hold back for your IRS? Is there a way around this? Is it hard to get that money back?
Thanks

 

[Msmithmd]

Sure, there is a way around it. Move to the USA and become a citizen. I'm not kidding- that's the only way I am aware to not be subject to the foreign citizen tax hold back on all USA real estate sales.

This isn't a penalty- it is withholding against any profit you may have made on the sale. Apparently the IRS has realized they don't have much chance of collecting real estate income taxes on foreign citizens, if they don't grab this amount at the time of a sale.

You can file a US federal tax return that demonstrates you didn't net a profit on the sale, and the hold back money will be refunded. Or, you might owe more than the 10%, if you made a good profit.

Disclaimer- I'm not an accountant or a real estate attorney. Seek the services of one within your home country to confirm that my understanding is correct.

 

[mort1331]

ok thanks, if that's the case I should just take my lumps since the profit will be more then 10%. Not that that's the reason Im selling. Just don't think we need that UY. Getting hit with that and the 10%commision is a 20%bite, but oh well. Might just hang on and rent for a bit just incase we need it.

 

[rcchello]

The tax is a percentage of your capitol gain, purchase price - (sale price + commission) * tax rate. Unless you made a 70% profit you will probably get money back by sending in the tax forms. That is saying that it does not cost you more by paying someone to do the forms for you.

 

[JimMIA]

Getting hit with that and the 10%commision is a 20%bite, but oh well.

Not really. The 10% withholding is just a temporary IRS protection against any actual tax you may owe -- as rcchello explained above.

If you owe no tax, you'll get all the money back. If you owe some tax, you'll get the remainder back.

 

[mort1331]

Not really. The 10% withholding is just a temporary IRS protection against any actual tax you may owe -- as rcchello explained above.

If you owe no tax, you'll get all the money back. If you owe some tax, you'll get the remainder back.

Ok so I do my own taxes up here, but for the US do I need someone for this or can I do this online?

 

[rcchello]

All the forms and instructions can be found at www.IRS.gov. The explanation of the withholding can be found here http://www.irs.gov/Individuals/ITIN-Guidance-for-Foreign-Property-Buyers-Sellers