District of Columbia Seller's Affidavit of Nonforeign Status
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How to fill out Seller's Affidavit Of Nonforeign Status?
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FAQ
For this purpose, a qualified substitute is (a) the person (including any attorney or title company) responsible for closing the transaction, other than the transferor's agent, and (b) the transferee's agent. The transferee receives a withholding certificate from the Internal Revenue Service that excuses withholding.
AFFIDAVIT OF NON-FOREIGN STATUS. Exhibit 10.6. AFFIDAVIT OF NON-FOREIGN STATUS. Section 1445 of the Internal Revenue Code provides that a buyer of a United States real property interest must withhold tax if the seller is a foreign person.
US law requires that the transferee (buyer) on a sale or disposition of a United States Real Property Interest withhold a percentage (typically 15%) of the total amount realized (the sales price) at the time of disposition (closing of sale).
In order to avoid issues with FIRPTA, the seller will sign an Affidavit and certify status. Otherwise, various pesky IRS forms, such as Form 8288 may be required.
A foreign seller can reduce the FIRPTA withheld amount if they apply for a Withholding Certificate (Form 8288-B). That means they would need to have first a TIN (tax identification number) and if they don't they should apply for one as soon as possible and before the closing of the deal.
The Seller's Affidavit of Non-Foreign Status ( AS-14) is used to document the exemption if the Seller is not a NRA. This can be signed by a: US citizen; US green card holder; or. Non-citizen who meets the substantial presence test (based on the number of days actually present in the US).
BASIC RULES UNDER FIRPTA If the seller is a foreign entity or person, the buyer must withhold the 10% and remit the tax to the IRS within 20 days of the date of closing. If the buyer fails to do so, the buyer is liable to the IRS for the tax that should have been withheld plus penalties and interest.
Exemptions: Here are the most common ones that the Seller should be made aware of: If the sales price is $100,000.00 or less, the exemption is automatic, no form needs to be completed. The Seller has owned and used the property as his principal residence at least 2 out of the 5 year period right before the sale.
