FIRPTA

[heynowirv]

We are buying a BWV contract from a CDN owner closing next week.We were told she was paying the tax to the IRS but we are still required to fill out a Form 8288 from the IRS.Has anybody else had this experience before?

 

[Great3]

Yes, it's your responsibility to make sure taxes are withheld from the seller's proceeds, or you may end up responsible. Hence you fill out the form and instruct title agent to withhold and remit payment on your behalf. So, yeah, fill out the form, and read it to understand why! It's the title company's job to help you, but really in fact they are doing you a favor, to make sure you don't end up on the hook. It's not like we know the requirements, when dealing with foreign sellers.

Great3

 

[heynowirv]

Yes, it's your responsibility to make sure taxes are withheld from the seller's proceeds, or you may end up responsible. Hence you fill out the form and instruct title agent to withhold and remit payment on your behalf. So, yeah, fill out the form, and read it to understand why! It's the title company's job to help you, but really in fact they are doing you a favor, to make sure you don't end up on the hook. It's not like we know the requirements, when dealing with foreign sellers.
Does the 10-15% come out of the closing funds that I send or do they expect me to also set those funds ,say 1500.-2000.in addition to what I'm paying for the contract?
Great3

So they take out the funds out of the closing funds I wire or am I expected to set aside another 1500.-2000.?

 

[Great3]

Out of the funds you wired... it's the seller's that needs to pay, but it's the buyer's job to make sure the sellers pay by instructing closing agent to withhold the amount needed.

Great3

 

[dvc lover 1970]

Make sure the closing agent has experience with foreign sellers. If yes then you should be all set

 

[CarolynFH]

A question just came to mind as I was reading this thread - if both seller and buyer are outside the US and neither is a US citizen, does FIRPTA come into play?

 

[RoseGold]

A question just came to mind as I was reading this thread - if both seller and buyer are outside the US and neither is a US citizen, does FIRPTA come into play?

Of course, the IRS can put a lien on the property. The buyer is still a US property owner and subject to the IRS's jurisdiction.

 

[CarolynFH]

Of course, the IRS can put a lien on the property. The buyer is still a US property owner and subject to the IRS's jurisdiction.

Thanks. I was just wondering.

 

[Great3]

A question just came to mind as I was reading this thread - if both seller and buyer are outside the US and neither is a US citizen, does FIRPTA come into play?

The gov't wants it cuts of the money. Any time there an international seller involved, they want payment of taxes on possible profits, only they don't know your cost basis, so take a percentage of your sales price up front. It's up to the foreign seller to file US income taxes to establish proper cost basis and proper profit and taxes due, and claim back any differences that got withheld. But how many foreign seller do you think do that? Cha-ching... Win, Win, for the US gov't....

Great

 

[CarolynFH]

The gov't wants it cuts of the money. Any time there an international seller involved, they want payment of taxes on possible profits, only they don't know your cost basis, so take a percentage of your sales price up front. It's up to the foreign seller to file US income taxes to establish proper cost basis and proper profit and taxes due, and claim back any differences that got withheld. But how many foreign seller do you think do that? Cha-ching... Win, Win, for the US gov't....

Great

Oh yes, I understand that well. Just wondered whether the foreign buyer had to fill out the FIRPTA forms like a US buyer does. As RoseGold says, the Feds can put a lien on it and cause a mess when the new owners become sellers, so FIRPTA reigns over everyone.

 

[heynowirv]

Out of the funds you wired... it's the seller's that needs to pay, but it's the buyer's job to make sure the sellers pay by instructing closing agent to withhold the amount needed.

Great3

Are they the same as the title company?

 

[Great3]

Are they the same as the title company?

Yes, the closing agent at the title company.

Great3

 

[heynowirv]

Yes, the closing agent at the title company.

Great3

Thanks

 

[Great3]

Thanks

Your welcome. Really, I don't think you need to worry too much. The title company is suppose to alert you that need to fill out the form. If the title company did that, than you will be good, they will follow the proper process to make sure you are covered. And you are, since you were told the seller will pay the taxes.

Great3

 

[heynowirv]

It's closing time!!!!!

 

[Great3]

It's closing time!!!!!

Get it done, and Welcome Home!!!

Great3