All Forum Posts by: Mark Sedarous

From irs.gov:

https://www.irs.gov/individuals/international-taxp...

"In most cases, the transferee/buyer is the withholding agent. If you are the transferee/buyer you must find out if the transferor is a foreign person. If the transferor is a foreign person and you fail to withhold, you may be held liable for the tax. For cases in which a U.S. business entity such as a corporation or partnership disposes of a U.S. real property interest, the business entity itself is the withholding agent."

In my circumstance, since the foreign partners have a US business entity (LLP registered in Arizona with an EIN) they become the witholding agent and are liable, so I think I am clear.

If the property title was in a foreign persons name with TIN, then in that circumstance I would have been the withholding agent and liable for the taxes.

Do you agree with my interpretation?

@Tom, this is the question I am trying to figure out, it appears the LLP with the 2 foreign partner has an EIN, but I am having no luck confirming the EIN. The seller did not agree to this language in the addendum:

• Seller to file 8828-B with IRS before COE.
• Title to to act as the withholding agent, will hold in escrow 15% of sale price until IRS withholding certification is returned. Upon return title will disburse funds accordingly to the seller and IRS(as applicable).

What advice would you provide me to protect myself as the buyer?

thank you for the responses thus far, I believe with your help my question has been answered and am more comfortable moving forward with the transaction.

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

Thanks for the welcoming messages!  I am starting to study for my Real Estate exam and taking my final class this week!

Hi,

I'm Mark, currently working full time as an engineering project manager.  I am beginning my real estate investment adventure in Arizona and beyond!  Would love to network with local investors here in Phoenix.  I have been shopping for my personal home for some quite time and I am beginning to learn the market.

I am almost complete with my real estate course and should have my license by May 2016!!

I would love to start with a multi-unit property for my first purchase!

Look forward to networking with you all.

Mark