What is FIRPTA? Understanding the facts about FIRPTA
FIRPTA is the acronym for Foreign Investor Real Property Tax Act. The disposition of US Real Property interest by a foreign nations is subject to the Foreign Investment in Real Property Tax Act of 1980 (also know by most as FIRPTA) income tax withholding. Basically what it means is that the United States is authorized to tax foreign person on the sale of US Real Property.
If you have a Foreign National who is selling Real Property at least in California, most Escrow Companies will follow the instructions of the principals in withholding and remitting the payments to the Internal Revenue Service (IRS) on their behalf.
Most reputable Escrow Companies will have a process in place for accommodating the ability “to hold back funds” if the seller has applied for a Withholding Certificate.
On the other hand keep in mind not all Escrow Companies comply to the FIRPA requirement, hence it is imperative if you are representing a seller who is a foreign national in a transaction that you protect your Broker, yourself as well as the interest of your government.
The last thing you want is a call from Uncle Sam that you did not protect their interest. Just saying check with your Broker as well your legal advisors so that you do not bring Pecuniary Liability on yourself.
If you are a consumer who is considering buying or selling a home, investment real estate, vacation homes, or beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Culver City, Marina Del Rey, Venice or Malibu. Feel Free to give me a call at 310.486.1002 email me at email@example.com visit one of my websites at http://www.endrebarath.com Your Pet Friendly Realtor. I contribute a portion of my commission to Local Animal Rescue Organizations.