Good morning everyone;
I want to share with you the answer to a common question regarding the use of a home and FIRPTA, as you know, FIRPTA is a deposit (not a tax) that applies to a foreign seller, many sellers buy and live in the property for a few years and for whatever circumstance they leave the U.S. and maybe the rent the house for a few months or simply they use it when they come back on vacation.
Many agents, have this idea that if the house was the primarily residence for the now foreign seller FIRPTA does not apply and that is not the case.
Buyer's purchasing property from a foreign seller have to send the FIRPTA withholding money to the IRS and seller can recover the FIRPTA deposit once seller files a U.S. tax return to report the sale of the property, if seller has a taxable capital gain the IRS will take the portion of the actual tax and refund the rest. HOWEVER, the use of the property is not a determinate factor in whether FIRPTA is due or not.
Remember we have prepared a FIRPTA checklist, if you want a copy send me an email, I will be glad to share that with you.
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Mary Enzi CAA
Tax Solutions – FIRPTA Consulting
[email protected]
+1 (281) 578-1040
Barker TX
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