FIRPTA Statement By Qualified Substitute
Definition and meaning
The FIRPTA Statement By Qualified Substitute is a document used in real estate transactions to certify that a seller of U.S. real property is not a foreign person. FIRPTA, or the Foreign Investment in Real Property Tax Act, requires buyers to withhold taxes on the sale of property by foreign sellers. This form indicates that tax withholding is not necessary because the seller has provided a FIRPTA Non-Foreign Affidavit, confirming their status as a non-foreign person.
Who should use this form
This form is intended for use by buyers (transferees) of U.S. real property when the seller (transferor) is deemed to be a non-foreign person. Typically, real estate agents, escrow officers, and settlement service providers will utilize this form to facilitate the transfer of property without the need for withholding.
Key components of the form
The FIRPTA Statement By Qualified Substitute includes several important components:
- Buyer Information: Details of the buyer, including name and escrow number.
- Seller Information: Identification of the seller and property address.
- Certification by Settlement Services Provider: Statement by the escrow officer regarding the non-foreign status of the seller.
- Record Keeping: Assurance that the seller’s FIRPTA Non-Foreign Affidavit will be kept in the escrow file.
- Request for Additional Information: Instructions on how to obtain further details if needed.
How to complete a form
To complete the FIRPTA Statement By Qualified Substitute, follow these steps:
- Fill in the buyer's name and escrow number at the top of the form.
- Provide the property address and seller's name in the designated sections.
- The settlement services provider must certify their role in the transaction and acceptance of the FIRPTA Non-Foreign Affidavit.
- Enter the date of completion and the escrow officer's signature at the bottom of the form.
- Ensure the buyer also acknowledges receipt of the form with their signature and date.
Form popularity
FAQ
To ensure that the buyer does not withhold funds, the foreign seller should file a 1031 Declaration Notice. With advance planning, you can receive permission from the IRS to prevent FIRPTA withholding on your sale. Once you have received an ITIN or EIN, then you can apply.
A seller may be exempt from FIRPTA if one or more of these circumstances apply: The sales price is less than $300,000 and the buyer (or a family member) has definite plans to reside in the home for at least 50% of the first 24 months of ownership.
Qualified Substitute is the Default. The seller will then manually complete Paragraph 3B and provide the form to the title or escrow company acting as the qualified substitute. The title or escrow company may use C.A.R. Form QS, or its own form, to satisfy its obligation to notify the buyer.
On the day of the USRPI disposition, the transferee must provide written notice to the court or trustee of the transferee's name and address, a brief description of the property, the amount realized on the sale of the property, and the amount withheld under Sec. 1445(a).
A qualified substitute is (1) the person, including an attorney or title company, responsible for closing the transaction, other than the transferor's agent, and (2) the transferor's agent.
(6) Qualified substitute The term ?qualified substitute? means, with respect to a disposition of a United States real property interest? (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.
A qualified investment entity is any real estate investment trust (REIT) or any regulated investment company (RIC). The entity is domestically controlled if at all times during the testing period less than 50% in value of its stock was held, directly or indirectly, by foreign persons.
