Did you need to get a 'US Tax ID number?

[FloFlo71]

I have signed my contracts and sent the deposit for my first small purchase of resale points but I have received another contract to sign from the title company 'magic vacation title' and it states the following:

You are purchasing this property from a foreign seller. The seller will be charged a 10% FIRPTA tax on this sale.
By law, you are responsible for remittance of that payment to the IRS when buying from a foreign seller. We gladly
handle this for you at closing. You will, however be required to apply for a US Tax ID number in order for us to submit
the required documents to the Internal Revenue Service. Please be in touch with me at your convenience for details on
applying for a Tax ID Number.

Is this normal, what will I have to do?

Has anyone else used this title company? I am buying through timeshare store. I am a bit annoyed as the timestore were obviously aware that the seller and myself are from the UK. I think I should have been advised of this sooner.

I assume if I pull out I will all or at least part of my $1000 deposit.
Thanks

 

[seashoreCM]

My preliminary findings.

All you need to do is get a U.S. tax ID number.

This tax transaction applies when the seller is not a U.S. citizen. The fact you and the seller are citizens of the same country does not matter.

The tax collected at this time is tax withholding. Some or all of it will be refunded after the seller files a U.S. tax return showing whatever capital gains he realized when selling the real estate or time share points, and the total tax withheld and/or paid in advance as estimated tax was greater than the tax computed and due for the year.

You the buyer do not remit an extra amount to the U.S. agent handling the sale. All you remit is the purchase price. If you are responsible for remitting some money directly to the (U.S.) IRS then you would subtract it from the amount you remit to the seller or the selling agent.

The agent handling the sale may or may not withhold the tax from the proceeds of the sale i.e. what you remitted as the purchase price before sending the balance to the seller.

You will need a U.S. tax ID number sooner or later, namely by the time you sell the timeshare points to somebody else.

 

[seashoreCM]

More findings.

The buyer is responsible for withholding the tax and sending it to the (U.S.) IRS or seeing to it that someone else actually does that. I would recomend that the buyer do the withholding himself if the sales agent is not local to the buyer.

There is an exception whereby the withholding does not have to be done when the property costs less than USD $300,000. and the property is a home and will be owner occupied. It doesn't specifically address time shares but it would seem that if you plan on using the points yourself for the next two years, that would qualify as owner occupancy.

See, also, http://www.itaxcpa.com/firpta_wh_direct.htm

For those eavesdropping and buying homes costing over $299,999. I would suggest delaying the closing until after you get your U.S. tax ID number and also the seller's U.S. tax ID number and an IRS form 8288.