Purchasing resale contracts from international sellers and dealing with FIRPTA, and Tax withholding

TexasTom

Earning My Ears
Joined
May 23, 2004
I'm not a DVC member yet.

Two resale contracts have been forwarded to DVC for ROFR.

The escrow company has just emailed me (the buyer) that:
- The sellers are foreign persons and I'm responsible to withhold either 10 or 15% of the purchase price.
- Then I pay the withholding amount to the IRS within 20 days of closing.
- I have the option of using a tax professional or using the escrow company to prepare, as a courtesy, for me.

Should I let the escrow company do it?
Is there anything I should be aware of?
Would this delay the closing?
Has anyone done this before?

Awaiting your answers.

Thanks,
 

BlackTea

Mouseketeer
Joined
Feb 18, 2019
The title company did everything for us, no extra cost, but we had to provide SSN, as they need to file something to IRS. Make sure you have a good title company, especially important in this case, we used Mason.
Closing could be delayed, it seems not so easy to secure notary services outside US...again a good title company can be very helpful, facilitating all kinds of communications when things don’t go as planned.
 

TexasTom

Earning My Ears
Joined
May 23, 2004
If that is all it takes, I'm fine with that. I was afraid it's going to be something complicated and time consuming.

Thanks
 

princesscinderella

DIS Veteran
Joined
May 27, 2011
It’s not a big deal just make sure they withhold the money for you to pay. I had a contract that the intl. seller submitted an exemption application and the money wasn’t withheld at closing. It was all new to me so I didn’t insist either. About a year later I got a letter from the IRS stating they denied the exemption and I owed the 15% since it was my responsibility as the us citizen. I contacted my closing agent and they were able to get the sellers to pay the tax thankfully and provided the proof to me that it was. It was a few hundred dollars at the time but resale prices were not what they are now either, so it will likely me more depending on the size of your contract. I’d buy an international contract again.
 

supersnoop

What time is the three o'clock parade?
Joined
Nov 13, 2013
Your title company should handle it. Mine sent me a copy of the IRS Form 8288 showing the withholding.
 

sndral

DIS Veteran
Joined
Feb 3, 2008
I'm not a DVC member yet.

Two resale contracts have been forwarded to DVC for ROFR.

The escrow company has just emailed me (the buyer) that:
- The sellers are foreign persons and I'm responsible to withhold either 10 or 15% of the purchase price.
- Then I pay the withholding amount to the IRS within 20 days of closing.
- I have the option of using a tax professional or using the escrow company to prepare, as a courtesy, for me.

Should I let the escrow company do it?
Is there anything I should be aware of?
Would this delay the closing?
Has anyone done this before?

Awaiting your answers.

Thanks,
I purchased one contract from foreign sellers (England) maybe 5 or so years ago and the closing company handled the FIRPTA/w/holding. I did have to supply my social security number. But there were no problems w/ the transaction nor were there any tax consequences to me. In my case I wasn’t offered the opportunity to handle paying the IRS directly, which I wouldn‘t have wanted to do in any event. You are depending on the escrow company to file the appropriate paperwork & send the money to the IRS, but any reputable escrow company presumably handles this type of transaction enough to know the ropes.
 

we"reofftoneverland

DIS Veteran
Joined
Aug 5, 2015
I wouldn’t do it. We did it last year. Everything went smoothly enough but now we are waiting for the feds to come after us. Lol. It’s too nerve racking.
 

turtle36

Earning My Ears
Joined
Jan 19, 2021
I'm so glad I found this post. I am currently in contract with an international seller and we are still waiting for ROFR. I just contacted our title company about this. Thanks!
 

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