Foreign Sellers of Real Property in the U.S. Pay 10% Tax

Is a foreign person taxed differently than a citizen, when selling property in the United States of America?  The answer is yes, but there are quite a few exemptions to consider as well. The Foreign Investment in Real Property Tax Act, otherwise known as FIRPTA, became law in 1980 and requires closing agents (attorney’s, title companies, etc.) to withhold 10% of the amount realized.  There are a few things that the “amount realized” could be calculated from, but generally it is the purchase price of the property.  The 10% withheld is owed to the IRS. The Code imposes on the transferee the liability for collection and payment to the IRS of ten (10%) percent of the purchase price when a foreign person sells U.S. real estate. The Code defines a "foreign person" as "any person other than a United States person." What that means is not entirely clear; however, the determining factor appears to be whether or not the transferor has a taxpayer identification or social security number. Who … [Read more...]

Canadians Love Clearwater Florida

Homebuyers from Ontario -- Canada's wealthiest and most populous province -- were among the most active in 10 U.S. real estate markets identified as international hot spots in an Inman News report released this month.In that report, "10 Hot Spots for Global Homebuyers," Inman News explores the 10 most popular areas in the U.S. for foreign homebuyers, based on public records of foreign buyers who cite a non-U.S. address. Six of the 10 market areas are in Florida, while the remaining four are in Arizona, New York, Hawaii and Nevada. The 10 markets, ranked by highest share of foreign buyers who used a non-U.S. home address, according to public records data complied by DataQuick, are: 1. Lakeland-Winter Haven, Fla. 2. Cape Coral-Fort Myers, Fla. 3. Orlando-Kissimmee-Sanford, Fla. 4. North Point-Bradenton-Sarasota, Fla. 5. Miami-Fort Lauderdale-Pompano Beach, Fla. 6. Phoenix-Mesa-Glendale, Ariz. 7. New York County, N.Y. (Manhattan) 8. Honolulu, Hawaii. 9. Tampa-St. … [Read more...]