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FIRPTA and SHORT SALES - DANGEROUS LIABILITY TO BUYER AND CLOSING AGENT
SPECIAL UPDATE - SEE SHORT SALE AND FIRPTA TAX WITHHOLDING - IRS ISSUES PRIVATE GUIDANCE
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It is critical for Realtors, Buyers, Closing Agents and Lenders to understand the important issues of the short sale when applied to the Internal Revenue Code's Foreign Investment in Real Property Tax Act of 1980 or FIRPTA transaction because disregard for following the FIRPTA rules will make the Buyer and Closing Agent and possibly the Lender liable to the IRS for the Seller's Tax Liability!!!!!  The problem is that right now there is NO RULE by the Internal Revenue Service ("IRS") for FIRPTA Short Sales.
Recently a Realtor asked me if we handle short sale transactions for foreigners - meaning persons who would be subject to FIRPTA.  Application of FIRPTA has been common in Florida real estate transactions for decades because of the large number of foreign buyers and investors.  The difference here was that the Realtor was asking if we could handle the short sale transaction of his foreign client seller.  This required some thought and it was enlightening to search for the answer.  It is important to point out that there is no specific rule for a short sale, and thus this discussion ... more

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