What Foreign Sellers Must Know
The disposition of a U.S. real property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests.
A disposition means “disposition” for any purpose of the Internal Revenue Code. This includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc. Persons purchasing U.S. real property interests (transferees) from foreign persons, certain purchasers' agents, and settlement officers are required to withhold 15% (10% for dispositions before Feb. 17, 2016) of the amount realized on the disposition (special rules for foreign corporations).
Our Services Include:
Form 8288 – U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests
Used by the buyer/transferee to report FIRPTA withholding to the IRS.
Must be submitted within 20 days following the property transfer.
Form 8288-A – Statement of Withholding
Provides detailed transaction information for each foreign seller.
Includes details such as the amount realized, the amount withheld, property description, seller and buyer identification, and closing date.
Form 8288-B – Application for Withholding Certificate
Allows a foreign seller to request a reduction or elimination of FIRPTA withholding if they anticipate that the 15% withholding exceeds their actual tax liability.
Form W-7 - Individual Taxpayer Identification Number (ITIN)
Call Coastal CPA for your tax filing assistance.