FIRPTA WITHHOLDING

There are two aspects to FIRPTA Withholding.

  1. The IRS requires Foreign Nationals (non-US residents) to have 15% (with some exceptions) withheld from real estate closing and other qualified distributions (such as corporate distributions to Foreign Nationals) withheld at the time of sale.

  2. There are two choices on how the FIRPTA Withholding can be remitted to the IRS.

    • The first is collected at closing or distribution and remitted to the IRS within 20 days.

    • The second is to request a Withholding Certificate. This is a filing process conducted ON the DAY OF closing or distribution. It involves submitting a tax return designed to calculate whether or not there are taxable gains. The IRS will respond within 90 days with permission to release any withholding in excess of that due the IRS for gains, if it applies. The withholding is held in escrow by the Settlement Agent pending receipt of the IRS letter. On receipt if money is to be remitted to the IRS it must be done within 20 days. Any amount authorized to be released to the Foreign National may be done so by the Settlement Agent from escrow at that thime.

Ph:  417-862-4710

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