Withholding of Tax on Dispositions of United States Real Property Interests. 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
Beginning Feb. 16, 2016 settlement agents will begin withholding 15% of the gross sales price on FIRPTA transactions.
Historically, the Foreign Investment in Real Property Tax Act (FIRPTA) has required 10% withholding in the U.S. from a non-resident foreign seller to the IRS.
New legislation identified as the Protecting Americans from Tax Hikes Act (PATH) introduced in December, 2015 mandates that the new FIRPTA withholding amount is 15% of the gross sales price, effective February 16, 2016.
Certain exemptions still apply to sales of $300,000 or less on properties intended to be used as a primary residence.
**As always, Equitable Title reminds you that our blogs are for informational purposes only and we recommend that you contact your accountant and/or tax professional for tax advice. **