5 Steps to Secure Your FIRPTA Withholding Exemption Affidavit

Picture this: You have got a great offer on your U.S. property, and you are all set to close the deal. But then, you hear about FIRPTA withholding. What now? How do you keep your hard-earned money from slipping through your fingers? The answer lies in the FIRPTA Withholding Exemption and Exemption Affidavit.

What Are FIRPTA Withholding Exemption and Exemption Affidavit?

The Foreign Investment in Real Property Tax Act (FIRPTA) says that when a foreign person sells U.S. property, they might have to pay a withholding tax.

But with the FIRPTA Withholding Exemption, you can avoid this tax. To get the exemption, you will need an Exemption Affidavit—a document that proves you’re eligible for this tax break.

Why are These Certificates So Important?

The FIRPTA Withholding Exemption can save you from paying a 15% withholding tax on your property sale. The Exemption Affidavit is your ticket to getting that exemption. It’s the proof you provide to the buyer or withholding agent, showing that you meet the criteria to skip the tax. Without these, you might end up paying more than you need to.

5 Steps to Secure Your FIRPTA Withholding Exemption Affidavit

Check Your Eligibility

First, make sure you qualify for the exemption. Generally, if the property is your primary residence and the sale price is under a certain limit, you could be eligible. It’s wise to talk to a tax expert to confirm this.

Gather Your Documents

Collect everything you need, like your sales contract, proof of residency, and ID. Don’t forget IRS Form 8288-B, which is crucial for applying for the exemption certificate.

Fill Out the Exemption Affidavit

This affidavit is a sworn statement that says you qualify for the FIRPTA Withholding Exemption. Make sure you fill it out correctly—mistakes can slow down the process.

Submit the Application

Once everything is ready, send your affidavit and documents to the IRS. Keep copies for yourself and use certified mail to ensure your application reaches them.

Follow Up with the IRS

After you’ve submitted everything, keep track of your application. It might take a few weeks to hear back, so be patient. If the IRS asks for more info, get back to them quickly to avoid delays.

Lock in Your Exemption and Keep More of Your Money

Dealing with FIRPTA withholding doesn’t have to be overwhelming. By following these steps, you can secure your FIRPTA exemption affidavit and avoid paying extra taxes. Remember, it’s all about taking it one step at a time.

Need assistance with FIRPTA Tax Returns? Reach out to us today and make sure you’re on the right path to saving money.