Both myself and our tax pro each have 30+ years experience in FIRPTA. It still surprises me that many realtors don't understand FIRPTA and fail to explain it properly to their clients even though the FIRPTA clause is in most contracts to buy and sell real estate.
HOW IT WORKS: FIRPTA is a U.S. Congressional Act. Any time a Foreign Seller (owner or partial owner) sells a property interest or receives income associated with real property, the Seller has 15% of the total sale amount withheld at the time of closing. The closing agent remits this amount to the IRS within 20 days unless a reduced withholding certificate has been filed with the IRS at closing. In which case it takes about 90 days for the IRS to notify what if any amount can be released to Seller by closing agent and what must be remitted within 20 days to the IRS. Seller must file a year end tax return with the IRS. This will include request for refund based upon computation of tax. The closing agent remits. A professional FIRPTA provider like FIRPTArefunds does the rest.
WHO PAYS: It is exclusively the Buyer's responsibility to withhold FIRPTA amounts from the Seller's proceeds at closing. The title closing agent normally performs this service for the Buyer. Both are held responsible by the IRS until the full FIRPTA withholding is remitted and received by the IRS.
HOW TO GET FASTEST REFUNDS: It is the Foreign Seller who wants the maximum refund from the full FIRPTA withholding money that the IRS is to receive. The Seller has a few options. Our firm FIRPTArefunds outlines the choices and helps the Seller decide. Hold back at 90 days and wait for a full or partial release, then file the year end tax return and a full refund, or go straight to that.
FASTEST REFUNDS are not just about time. The IRS has Seller's money. The IRS is famous for rejecting refund, exception, reduced withholding requests for even the slightest error. Even one tiny misspelling in one form field for example. Then the typical 90 day re-submission and waiting period for an answer starts anew. The less experienced often find refunds taking 1/2 a year to a year and more.
It pays to use highly experienced FIRPTA professionals such as the expert services of FIRPTArefunds. Always a free consultation.
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