NYC foreign investment lawyer Natalia Sishodia releases a new article (https://sishodia.com/should-i-withhold-firpta-at-closing-on-sale-of-ny-home-if-i-am-not-a-citizen/) that explains whether a foreigner should withhold FIRPTA at closing upon the sale of an NYC property. The lawyer explains that as a foreign investor, it may be difficult to sell properties in the United States. FIRPTA or Foreign Investment in Real Property Tax Act of 1980 states that funds from a transfer of real estate by a non-US citizen are subject to notice and withholding requirements in compliance with Section 1445 of the Internal Revenue Code.
“FIRPTA authorized the United States to tax foreign persons on sales of U.S. real property interests. FIRPTA requires that a buyer purchasing U.S. real property from a foreign person withhold 15% of the gross purchase price of the property. The amount withheld must be submitted within 20 days after the day of closing,” says the NYC foreign investment lawyer.
The lawyer explains that FIRPTA regulations often apply to the seller, however, a buyer should still find out whether the transferor is a foreign person. The buyer may be held liable for the taxes if a seller is a foreign person and the buyer failed to find that out. In the USA, anyone who is not a US citizen is considered a foreigner.
Attorney Natalia Sishodia mentions that there are also exceptions to FIRPTA withholding. She mentions that usually the transferee/buyer is the withholding agent. However, in some circumstances, FIRPTA withholding may not be required. There are also FIRPTA withholding rules that are very complex so it is usually advised to withhold FIRPTA when the buyer is in doubt.
In the article, attorney Sishodia also adds that it is possible to adjust the amount that must be withheld from the disposition of a U.S. real estate property interest. The transferee, transferee’s agent, or the transferor may request a withholding certificate. These requests usually take about 90-120 days to process.
Furthermore, if a Withholding Certificate was applied for, required funds must be submitted within 20 days of the Withholding Certificate notice. Attorney Natalia Sishodia emphasizes that it is important to seek the help of an experienced real estate attorney for these kinds of matters in order to ensure that the client understands their rights in the transaction.
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SOURCE: Press Advantage [Link]
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