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REAL ESTATE TAX ARTICLES

Change in FIRPTA Withholding from 10% to 15%

By Cameron Combs | March 23, 2016

Change in FIRPTA Withholding from 10% to 15% Under the Foreign Investment in Real Property Tax Act (“FIRPTA”) the sale of United States real property owned by a non-resident alien is now subject to 15% withholding (10% for dispositions before February 17, 2016). Why a withholding? To prevent a non-resident alien from taking the sales proceeds on the sale of the United States property back to their home country without paying income tax on the proceeds. What is the procedure? At closing, the title company pays from the seller’s proceeds the 15% withholding to the IRS. The non-resident taxpayer then…

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