What's the FIRPTA tax? (selling question)

[mbb]

In addition to paying a 10% commission fee to a broker (through TTS - apparently it's usually 12%, but is currently reduced), there is a 10%"Foreign Investment Withholding Tax" that is applicable to sellers from outside the US.

State tax? Federal tax? Who gets it?

We're from Canada, and this would take a HUGE chunk out of our 160point BCV sale...

Any suggestions? Dean?

TIA!!

 

[drusba]

It is a US federal withholding that is designed to have those from outside the US pay the US capital gains tax. Go here for an explanation: http://www.irs.gov/businesses/small/international/article/0,,id=105000,00.html

They withhold 10% of all amounts you realize in the sale. However, you can fill out and provide a form that calculates the actual tax to reduce the amount or to get money back afterwards. The actual tax is something like 15% to 20% of your actual gain which is sale price minus commission minus certain other costs of the sale minus your original purchase price and thus the actual tax usually ends up being less than that amount originally withheld.

 

[mbb]

We really appreciate the link and the info