Resale with foreign person - 10% FIRPTA tax?

[gncntry]

I am buying a 100 points BCV resale and received paperwork from the title company stating the seller is a foreign seller. The paperwork says that the seller will be charged a 10% FIRPTA tax, but that I am responsible for remitting that payment to the IRS.

I've sent an email to the title company asking for more information.

Has anyone dealt with a resale with a foreign seller? This sounds to me like I am going to have to pay another 10% on top of the sales price. Am I misunderstanding?

 

[dbs1228]

I do not know the answer but I am guessing that the 10% will be deducted at closing off the purchase price and you will be responsible to remit that portion to the IRS. Seems strange that the sellers or closing company are not the ones who have to send in the payment. Good luck let us know what you find out.

 

[Anthony1971]

Call the IRS check the website for the number as I do not think you can post a number here they are very helpful...
What I can tell as this seems to be very similar...
If you borrow money form an overseas entity when you make a payment YOU are responsible to pay the IRS 10% of what is sent. This needs to be done within 7 days of the payment. In turn the person or company receiving the money needs to file a tax return with the IRS in the US to claim what is profit and receive a refund or pay.
If the 10% is to be deducted or not.... you need to work that out with the closing company and seller and have it all in writing.
What I can tell you is call the IRS to understand what you need to do as you will be fined and this will be part of your tax return if it is not done correctly.
also when you make the payment you need to follow up with the IRS as the often make a mistake as to where the money is applied as you fill out a standard form and send it with a wire transfer....yes there are fees for the wire as well.
I could be wrong with some or all of this but I do this twice a year for a 10% tax for monies paid to overseas..

 

[bababear_50]

Hi
Mel here
I am Canadian

I am considered a foreign seller,,,
I sold a small contract although it won't close until march.
I will have to pay the FRIPTA Tax (10% of the sale) out of the proceeds from my sale.
I have authorized the closing company to do this for me.
I don't think you as the buyer should be remitting the tax on the sale of this.
I could be wrong though.I would contact the agency who you bought through.
I used the Timeshare Store--(Jamie)
Best wishes

Hugs Mel