FIRPTA withholding certificates

My first FIRPTA transaction.

If buyer acquires property from a foreigner for use as their personal residence and the sales price is less than $300K then they are not required to withhold the 15%, but are they still required to obtain a withholding certificate from the IRS? Thanks

My first FIRTPA transaction.

It's FIRPTA (Foreign Investment in Real Property Tax Act), not FIRTPA. Maybe you can fix the subject, for the benefit of future searches.

My first FIRTPA transaction.

It's FIRPTA (Foreign Investment in Real Property Tax Act), not FIRTPA. Maybe you can fix the subject, for the benefit of future searches.

The IRS does not provide a certificate.

Withholding rate is 10% if the amount realized is less than a million. Also, if the amount realized is less than 300k, no withholding is required. The certificate is not needed if it qualifies for exceptions.

The IRS does not provide a certificate.

hi
how do i get the certificate? i just need to file Form 8288-B and file here:
Internal Revenue Service
P.O. Box 409101
Ogden, UT 84409.

https://www.irs.gov/individuals/international-taxpayers/format-for-applications
https://www.irs.gov/individuals/international-taxpayers/withholding-certificates

The amount that must be withheld from the disposition of a U.S. real property interest can be adjusted pursuant to a withholding certificate issued by the IRS. The transferee, the transferee's agent, or the transferor may request a withholding certificate. The IRS will generally act on these requests within 90 days after receipt of a complete application including the Taxpayer Identification Numbers (TIN’s) of all the parties to the transaction. A transferor that applies for a withholding certificate must notify the transferee in writing that the certificate has been applied for on the day of or the day prior to the transfer.

"The property is in our joint names, don't we both have to file a form 8288B?

Will the fact that we will apply for a withholding certificate hold up the transaction? Or will the title company accept that we are applying and proceed with the sale on that basis?"

I'm sure it will hold up the transaction.
And I would bet IRS won't comply within the 90 days.

Doesn't the escrow company handle this routinely?
Getting TINs, etc take longer than the time anticipated for most real estate closings.
If any amount must be withheld, the responsible party files for a refund and waits patiently.

...

oh boy, this is not working out

Juro – We just received this contract, and will have a final settlement statement ready much closer to the closing date. I’ll also send you the buyer’s contact information following this e-mail.

Will the exception be something that’s approved prior to closing? Will we? have direction from the IRS to not withhold the 15%

I’m not familiar with this, if we don’t have an approved exemption we would have to withhold the 15%.

Jami – Is that correct on our end? We can’t proceed with the withholding being exempted without something from the IRS?

Asking in case there is another way I’m not aware of.

Who should be the withholding agent?
the title agency?
the title agency wants the buyer listed as the withholding agent, is this good?

According to the IRS website: "In most cases, the transferee/buyer is the withholding agent. If you are the transferee/buyer, you must find out if the transferor is a foreign person."
The money is sent to the IRS within 90 days, the seller files a tax return or exemption and the IRS remits to the seller.
Note that some states [Hawaii] have similar rules.

thanks, keiser.

The buyer would needs to provide his TIN for the forms 8288,8288-A, & 8288-B.

I tried to file an 8288-B last year and the buyer would not accept it because the IRS is taking 10 months to process at which point, they would need to send it in the withholding anyway. Make sure NRA has an EIN or you will never get their money back.

I have seen situations in past years where a seller has a hardship. Meaning the seller would not be receiving much of any proceeds of sale. In these situations, I have seen a CPA file a hardship prior to closing and a withholding Certificate issued by the IRS “prior” to closing. I have not seen this since covid.

how do i file for hardship for the seller?