Thank you so much for your message, SPT is a bit more complex than just days of presence, we have to make sure the seller is NOT in the U.S. under a certain type of visa and is not filing a Non Resident return among other matters, please feel free to call our office so we can discuss this particular transaction and give you more information.
Original Message:
Sent: 01-06-2025 11:05
From: Kathleen Dartez
Subject: FIRPTA - New year New Rules?
Hello Mary,
Thanks for providing such valuable information on FIRPTA. I have a question for you regarding the Substantial Presence Test. The Seller is not a US Citizen and is not a permanent resident. My understanding of the SPT is that it has two components: (1) being physically present in the US for at least 31 days during the current calendar year and (2) being present for at least 183 days over the past three years (weighted differently for each year). My question is regarding the 31 days during the current calendar year. It is January, so is it possible for anyone to satisfy the SPT in January of any calendar year? Would a good, practical piece of advice be to settle in December or February, rather than January?
Thanks so much for your insight.
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Kathleen Dartez
Managing Attorney
Fredericksburg VA
+1 (540) 900-4320
Original Message:
Sent: 12-23-2024 12:57
From: Mary Enzi
Subject: FIRPTA - New year New Rules?
Hello ALTA:
We are asked many questions everyday about FIRPTA, the most common one is the need of having a U.S. TIN at the time of closing, many times the buyers or agents representing buyers want to establish their own rules and that is not possible, not when it comes to FIRPTA, here is our approach when dealing with a buyer or buyer's agent who is not clear on the rules about the seller having a U.S. ITIN:
Here's what you might want to emphasize when you speak with Buyer's agent/attorney:
- Stick to the Contract: Politely but firmly reiterate that the contract is clear on the FIRPTA requirements. Any additional conditions need to be mutually agreed upon and documented in writing.
- Clarify FIRPTA's Purpose: Explain that FIRPTA primarily deals with withholding taxes on foreign sellers to cover potential tax liability. If the sellers aren't foreign, these extra requirements are irrelevant.
- Offer Solutions: If the buyer is truly concerned about potential tax liabilities, suggest they contact us.
- Document Everything: Make sure to keep records of all communication and any agreed-upon changes in writing to avoid future disputes.
Once Buyer's agent/attorney understands they are demanding something not in the contract, the transaction should proceed with no more FIRPTA issues.
An ITIN is necessary so seller can recover the FIRPTA deposit and to included on the 1099-S, but not indispensable for closing, as always I urge you to contact a licensed tax professional expert in FIRPTA matters if you have any questions.
I wish you and your love ones a very Merry Christmas, Happy Holidays and Fantastic and Prosperous 2025
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Mary Enzi CAA
Tax Solutions – FIRPTA Consulting
[email protected]
+1 (281) 578-1040
Katy TX
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