What is FIRPTA Tax?

People from all over the world invest in United States real estate. If you’re foreign owner selling a United States based property, here are some things you need to know. The Foreign Investment in Real Property Tax Act of 1980, also known as FIRPTA, may apply to your sale of US Property. FIRPTA is a tax law that imposes U.S. income tax on foreign persons selling U.S. real estate.

Under FIRPTA, if you sell a U.S. real estate, the buyer has an obgliation to withhold 10% to 15% of the amount realized from the sale. The amount realized is normally the Sale Proceeds/Sale Price. This way of withholding is how IRS collect U.S. tax owed by foreign seller. For more information on Forms associated with FIRPTA Click here.

Limited liability company with one owner (known as a single-member LLC)

A single-member LLC is a legitimate legal entity, however can be defaulted to being disregarded for purposes of US income tax reporting. Any US income tax reporting will be done in the name of the owner, not the name of the LLC.  For example, if a foreign individual is the only owner of a US LLC, the US income tax reporting is done in the name of the foreign individual. In this situation, the FIRPTA withholding rules would apply as the seller for purposes of FIRPTA is the foreign individual, not the US LLC (including Foreign Corporation owned by Single member LLC).


Individual Single Member LLC or for Individual Foreign sellerIndividual/More than Member LLC/PartnershipUS LLC Single/More members with check the box election done
Firpta withholding appliesFirpta withholding does not applyFirpta withholding does not apply

FIRPTA Tax rules are complex and each scenario of tax withholding varies and each foreign person needs have an ITIN to make the appropriate withholding exemptions claim or refund by filing 1040NR tax return.

We are one of the acceptance agents (Acceptance Agent VS CAA) with many years of experience with the ITIN application process and FIRPTA tax ITIN application refund claim process.

Our team specializes in international expatriate U.S. personal tax return service. If you need assistance with ITIN Renewal/US 1040 filing for refund claim/FATCA Compliance work/FBAR FINCEN114 Filing, ITIN/ Form W7 Application/E.I.N./Form W8BENE or Certified Acceptance Agents [C.A.A.] services/1040NR U.S. tax filing for refund claim of excess 1042S / 8288A/ 8805/ W2/ 1099.

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