FIRPTA Tax Returns

FIRPTA is the Foreign Investment in Real Property Act. The purpose of FIRPTA is to ensure foreign persons who own U.S. Real Estate Property file the necessary tax documents regarding the sale or transfer of the U.S. property. While foreign persons who sell certain U.S. assets are not subject to capital gain on the sale (subject further to the 183-day rule), the same rules do not apply to the sale or transfer of U.S. real estate. Therefore, when a foreign person sells or transfers U.S. real estate, there are additional IRS processes and procedures the parties must go through to ensure tax compliance. With proper planning (and obtaining the Form 8288-B necessary certificate), the tax impact may be minimised.

The FIRPTA withholding certificate is used to minimize the amount of the sale price that is withheld. Here is an example of why it is necessary: Michelle is a foreign national who owns a U.S. property that she purchased for $800,000. She uses it as a rental property. Michelle sees the market declining and wants to pull the money out so that she is liquid to make other investments. She enters into a residential purchase agreement to sell the property for $840,000.

The capital gain on this type of sale is probably nil, once the expenses are factored into the sale price.

But, unless Michelle is able to obtain a withholding certificate, the US government will require that 15% of the sale price is withheld, which is $126,000.

It is important to note the difference that the 15% that the US government withholds is based on the sale price and not the gain.

In order to avoid a 15% withholding, the transfer can apply for a withholding certificate using IRS form 8288-B.

If the form is accepted by the IRS, then the standard 15% withholding does not apply and withholding based on the transfer or sale of the property will be reduced or eliminated.

Make sure to file in a timely manner. This is where it gets a bit tricky.

That is because the IRS (even before COVID) can take upwards of 90 days to process the 8288-B request. If the certificate is issued before the transfer of property, then no withholding may be required. If the certificate is issued after the withholding, it may speed up the time for refund, and if you are familiar with dealing with the IRS — it would be in your best interest to apply before the transfer.

FIRPTA, or the Foreign Investment in Real Property Tax Act, requires foreign persons (non-U.S. resident aliens) and entities to withhold a portion of the proceeds from U.S. real estate sales for tax purposes. This applies to foreign buyers and sellers in U.S. real estate transactions. If you’re a foreign individual or a representative (such as a title agent or attorney) handling a foreign seller, you’ll likely need FIRPTA filing services to meet IRS requirements.

Our services cater to various professionals, including real estate agents, title agents, attorneys, brokers, and foreign buyers and sellers. We provide tailored tax solutions that simplify the process for those involved in real estate transactions, as well as for anyone with IRS obligations. Our experienced team ensures that both individuals and corporations meet compliance standards efficiently.

We specialize in handling FIRPTA-related tax documentation so that you can focus on closing deals. For professionals like title agents and real estate brokers, our team prepares FIRPTA forms, certificates, and affidavits to ensure the transaction complies with IRS regulations. With our support, you save time and avoid potential delays in closing due to incomplete or incorrect filings.

We provide expertise in FIRPTA Withholding Certificates, which can help reduce or even eliminate FIRPTA withholding requirements. Our team guides you through the application process for these certificates, potentially allowing you or your client to retain more funds at closing rather than waiting until the next tax year for a refund.

No, you don’t have to send your original documents! As Certified Acceptance Agents (CAA), we can certify your original passport, visa, or national ID documents without submitting them to the IRS. This allows you to keep your important documents safe while still meeting FIRPTA and ITIN requirements.

An ITIN, or Individual Taxpayer Identification Number, is required for non-U.S. residents who need to file taxes but are not eligible for a Social Security Number. If you’re a foreign seller of U.S. real estate, you’ll need an ITIN to meet FIRPTA requirements. Our team helps with ITIN applications and certifications, ensuring a smooth process from start to finish.

Yes! If you’ve sold U.S. real estate as a foreign person, you can often file for an early refund within the same tax year rather than waiting until the next year. Typically, these refunds are processed within 90 days. Our team prepares and submits the necessary documentation to expedite your refund and ensure compliance.

In addition to FIRPTA filings, we offer a wide range of accounting and tax services for both U.S. residents and non-resident aliens. Services include IRS income tax returns, payroll tax filings, corporate tax filings, estate and gift tax returns, and tax consulting for audits, examinations, and collections. Whether you’re an individual or a company, our team provides customized support for your specific tax needs.

With over 43 years of industry experience, our team consists of professional accountants and tax preparers—not assistants or clerks—who work directly with clients. Our deep understanding of U.S. tax regulations and FIRPTA processes allows us to deliver top-notch service, helping you navigate complex filings with confidence.

No, we offer a free consultation to understand your needs and determine how we can best assist you. If you’re uncertain about FIRPTA requirements or have other tax-related questions, simply fill out our “Get in Touch” form. We’ll schedule a no-cost consultation to discuss your situation and outline how our services can benefit you.