Foreign seller open escrow

[Doris1962]

And now, as I said on another thead, I'm selling my dvc contract, I just dont know how this kind of things work in USA with closing company.

So I've received closing documents and I have to select one of those following things and I dont know the least expensive and the implication of them, those choise are :
a) we will apply for the exemption process via Dee-Jay & associate, a qualified FIRPTA specialist( dont know what it is)

B) we will applied for the exemption process directly with IRS, acting as our own agent ( what's that)

C) we will relinquish the 10% without further pursuit or obligation from the IRS

I just dont know witch one I have to select

Thank you very much, you dont know how much all of you have helped me

 

[drusba]

Go here to begin your research: http://www.irs.gov/businesses/small/international/article/0,,id=105000,00.html

FIRPTA is the acronym for a US tax law. For sales of US property by foreigners, the broker or closing company is required to withhold that 10% until you pay capital gains taxes or submit a return that shows you owe none; i.e., it is to make sure you pay it. It is not wise to just relinguish the 10% because the actual tax you will owe is less than that. They will be witholding 10% of essentually the sale price. Say you sell for $20,000. That means a witholding of $2,000. However, the actual tax you will owe is only on the true gain after you deduct your purchase price (and some costs of sale). Thus, if you purchased for $18,000, your maximum possible gain is $2,000 of which the actual tax owed should be in the 20% range meaning $400. Also, I do not know what that form is saying as I do not think you have an exemption and you do not want to relinguish the 10%. You want to file a tax form and pay any tax on the gain so you can get the money back and thus none of those choices look correct.

 

[Doris1962]

thank you