New York City real estate attorney Natalia Sishodia releases a new article (https://sishodia.com/what-is-firpta-foreign-investment-in-real-property-tax-act/) that explains the meaning of FIRPTA or Foreign Investment in Real Property Tax Act. The lawyer mentions that in the United States, a domestic citizen is required to pay capital gains taxes on certain items including the sale of a real estate property. However, a foreign citizen is usually not required to pay these kinds of taxes. This is why the government put the Foreign Investment in Real Property Tax Act in place to collect tax from foreigners who sell real estate properties in the USA.
“With the vast amount of foreign investment in New York City today, understanding FIRPTA requirements have become very important. Any foreign seller or individual purchasing real estate from a foreign person should understand their responsibilities under FIRPTA,” says the New York City real estate attorney.
The lawyer explains that before FIRPTA, foreign sellers were not subject to any taxes for capital gains if they sell a U.S. real estate property. However, this was viewed as a competitive advantage to foreign investors who owned properties in the United States. This is why Congress removed this perceived advantage and required foreigners to pay a tax based on the gross amount realized by the sale of domestic real estate.
Attorney Natalia Sishodia also adds that a buyer purchasing from a foreign individual is required to withhold a percentage of the purchase price of the property. This is to ensure that tax is collected. The among will be held by the IRS in order to offset any taxes owed on the sale. If the amount withheld is bigger than the taxes calculated, the excess amount will be refunded to the seller.
In the article, attorney Natalia Sishodia explains the withholding rates based on the sales price of the property. The lawyer says that if the sales price of the property is less than $300,000, FIRPTA may not be applicable. If the sales price of the property is $300,000 to $1 million, FIRPTA taxes must be withheld at a rate of 10% of the amount realized. And lastly, if the sales price of the property is over $1 million, FIRPTA taxes must be withheld at a rate of 15% of the amount realized.
Lastly, the real estate lawyer emphasizes that it is very important to seek the help of a real estate attorney when it comes to matters such as the FIRPTA. Having a skilled attorney may be able to help the client understand their rights and ensure that their profits are safe.
About Sishodia PLLC
Sishodia PLLC’s team of professional New York City real estate attorneys pride themselves on their ability to give the most comprehensive advice and guidance possible for their clients. The lawyers at Sishodia PLLC take time to fully understand each client’s unique goals and circumstances, minimizing potential risks and issues. Call them today at (833) 616-4646 for a consultation.
Sishodia PLLC is a boutique New York real estate law firm offering experienced, individualized legal solutions to clients ranging from first-time homebuyers to seasoned real estate investors.
Sishodia PLLC
600 Third Avenue 2nd Floor, New York, NY 10016, United States
January 09, 2023 – New York City Real Estate Lawyer Natalia Sishodia Discusses Who Pays Real Estate Closing Costs in New York
January 06, 2023 – NYC Commercial Real Estate Attorney Natalia Sishodia Explains Purchasing and Selling Commercial Properties in New York
January 05, 2023 – New York City Real Estate Lawyer Natalia Sishodia Discusses the Disadvantages of Owning a Condo in New York
January 04, 2023 – NYC Real Estate Lawyer Natalia Sishodia Discusses the Red Flags One Should Look Out For When Buying a Condo
December 21, 2022 – NYC Real Estate Attorney Natalia Sishodia Explains What Questions One Should Ask Before Buying a Co-Op in New York
December 20, 2022 – Manhattan Estate Planning Attorney Natalia Sishodia Explains How Sishodia PLLC Can Help With Estate Planning
December 07, 2022 – NYC Condo Real Estate Attorney Natalia Sishodia Explains the Differences Between a Condo and a Co-op in New York
December 06, 2022 – New York City Real Estate Attorney Natalia Sishodia Explains How to Transfer a Title in New York
November 23, 2022 – NYC Foreign Investments Lawyer Natalia Sishodia Discusses the Legal and Tax Implications of Foreign Investment
November 22, 2022 – NYC Real Estate Attorney Natalia Sishodia Discusses How to Avoid the Transfer Tax in NYC