Addendum Buyer Seller Withholding
Description
How to fill out Addendum For Sale Of Other Property By Buyer?
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FAQ
FIRPTA: What It Is and How It Works FIRPTA requires that any individual who is selling a property in the U.S. that is not a U.S. citizen will have 15% of the gross sales price withheld at closing. This 15% withholding must then be remitted to the Internal Revenue Service (IRS) within 20 days after closing.
This forty-plus-year-old mechanism was designed to help ensure that non-U.S. citizens do not escape paying taxes on income from the sale of U.S. real property. It requires the buyer of real property from a foreign seller to withhold a portion of the sale price and remit the tax to the Internal Revenue Service (IRS).
To ensure collection of the FIRPTA tax, any transferee or buyer acquiring a U.S. property interest must deduct and withhold a tax equal to 15 percent of the amount realized on the disposition.
If you are classified as a foreign individual, the rate of FIRPTA withholding is 15% of the purchase price. Withhold this particular withholding tax when you close on your property deal. The rate of FIRPTA withholding for a foreign corporation is equal to 21% of the gain.
FIRPTA Rates and Withholding For example, let's say that a foreign corporation sells property for $10 million. At the closing, the purchaser would withhold 15 percent of the sale price, which in this case would be $1.5 million (15 percent of $10 million).
