New FIRPTA Requirements in 2016
New FIRPTA Requirements in 2016
The withholding rate for the new FIRPTA Requirements in 2016 has been increased to 15% of the amount realized (generally the sales price) on any sale that closes on or after February 17, 2016. Withholding of 15% is required on all sales transactions, unless one of the following circumstances applies.
1) Seller executes a “Certification of Non-Foreign Status (Ind, Corp, LLC, Trust, Estate)”. — Exempt from FIRPTA withholding
2) or Buyer acquires the property for use as a residence (*) and the amount realized is not more than $300,000. — Exempt from FIRPTA withholding
3) or Buyer acquires the property for use as a residence (*) and the amount realized is more than $300,000, but not more than $1,000,000. — FIRPTA withholding percent is reduced to 10%
4) or Buyer acquires the property for use as a residence (*) and the amount realized is more than $1,000,000. — FIRPTA withholding percent is 15%.
(*) To qualify as a residence, the buyer or a member of buyer’s family must have definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two 12-month periods following the date of transfer. When counting the number of days the property is used, do not count the days the property will be vacant.
If the seller elects to apply for a Withholding Certificate to reduce or eliminate the required withholding amount and the final determination from IRS has not been received , FIRPTA Withholding is required based on the above criteria.
For more information, you can visit the IRS site. Also, we strongly recommend that you speak with your lawyer or financial planner.
Response to "New FIRPTA Requirements in 2016"