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Updated almost 6 years ago,
FIRPTA Confusion as a Buyer
Hello community experts,
I am looking at purchasing a condo in which the sellers title is under an LLP registered in Arizona with both the partners being Canadian residents. I am not using a buyers agent and everything I am reading from the IRS concerns me in that it puts the final liability of FIRPTA on the buyer should tax liabilities not be paid on the proceeds from the sale.
Am I over-worrying? Should I just let the transaction process proceed and inform the Title company of facts I am aware of. I understand title insurance won't cover me in this situation should a tax liability not be satisfied.
Essentially I am trusting the title company and the seller to answer truthfully and withhold the applicable tax liabilities should there be any. How do I protect myself as the buyer from the tax liability should someone make a mistake and does not pay the proper tax liabilities?
I was thinking of adding in the addendum the seller to complete IRS form 8288-B which the IRS determines the tax liability on the transaction, and that title hold in escrow 15% of the proceeds until the IRS responds to distribute the 15% of the proceeds applicably.
Any other advice or methods to protect myself as the buyer?
Thanks in advance, Mark