FIRPTA (US Capital Gains Tax) / Foreign Investment in Real Property Tax Act-1980
The IRS requires that any non-resident who sells an interest in US real property is subject to a FIRPTA Withholding tax. FIRPTA applies to what it defines as a U.S. real property interest, which includes: interests in land, and in Buildings Commercial or residential. This tax is 15% of the gross contract sales price (i.e. $30,000 on a property with a sales price of $200,000). This Withholding tax is required to be forwarded to the IRS, by the Closing Agent, within 20 days of the date of closing, unless the seller appoints a tax firm to file an application for early release of the funds.
We can file form 8288B with accompanying paperwork, which will ensure that the Closing Agents only hold the 15% until the IRS confirms our calculations and issues a release letter, usually within 90 days. Our firm has excellent contacts within the IRS at Ogden, Utah allowing us to expedite the process and reach a successful conclusion.
Without the FIRPTA application, the seller (taxpayer) could be waiting up to 15 months to receive any tax refunds resulting from the sale of the property. Therefore, we advise most of our clients to take advantage of the faster option and advise us as soon as they have a buyer for their property or land. The filing of the paperwork must happen on, or before the closing date of the sale and will always fail if it is attempted after the sale has finalized.
Please telephone +44 (0) 1925 758330