Can I Avoid FIRPTA if I Have a Green Card?
Real estate investment has been a flourishing business in the U.S. for the past few years. While there are many exemptions and deductions to take advantage of when selling a real estate property, if you are a foreign seller, you have to bear in mind one more thing. The FIRPTA. This is a dreaded tax by many and one of the most common questions we get asked by clients is “Can I avoid FIRPTA if have a Green Card?”. So let’s look at that.
What is a FIRPTA?
We have given a detailed explanation of what FIRPTA is in one of our older blog posts, but just to quickly recap - this is a 15% tax on the gain of the real estate property sale that the foreign seller owes to the IRS. Buyers are often required to withhold that amount and it can be a tedious experience.
How Can You Avoid FIRPTA withholding?
Good news! Even if you are not living in the U.S., you can still avoid FIRPTA if:
- You as a foreign seller have a Green Card AND Social Security Number. It is very important that the two are present.
- You don’t have a Green Card or SSN, but the property is priced up to $300,000.
- The real estate property is a foreign corporation.
- You can provide a legal notice from the IRS.
- The buyer signs an affidavit where he or she confirms that they will be using the real estate property as their main residence for at least 2 years after the purchase.
To avoid FIRPTA withholding, you will have to fill in and submit Form 8288 as well as apply for a ITIN or tax ID Read more. Upon the approval of your application, you will receive a certificate, which you can then present to the buyer and be free of the withholding.
The most reliable way to deal with FIRPTA is through a consultation with a tax accountant. These professionals are well familiar with the tax laws, all of their updates and the legal loopholes you can use to minimize the amount of taxes you owe.
FAS CPA & Consultants is glad to offer a free consultation over the phone, so call us on 786-462-7899. Alternatively, you can send us an email and arrange a session at [email protected].
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FAS CPA & Consultants
9000 SW 137 AV Suite 224 Miami, FL 33186 T: 786-462-7899 E: [email protected]
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