Homes for sale in Phoenix AZ, Chandler AZ, Gilbert AZ and Mesa AZ

FIRPTA - ARIZONA BUYERS BEWARE

Arizona Home Buyers may find themselves purchasing U.S. real property (a home) owned by a foreign person and they should be wary. In this event Federal Foreign Investment Real Property Tax Act (FIRPTA) Tax Withholding rules require U.S. buyers to withhold from the foreign seller 0%, 10% or 15% of the TOTAL sales price of foreign owned real property they are purchasing to remit to the U.S. Treasury.

In Arizona your escrow officer will withhold from the seller the amount required. If an exception is in question, escrow has 30 days from close of escrow to wait for a resolution before the money must be sent to the U.S. Treasury.

See exceptions to buyer withholding of foreign seller funds at closing below.

 

The U.S. government makes it the responsibility of the buyer to withhold money until the seller provides proof taxes are not owed to the U.S. Treasury or a waiver is provided. If the buyer fails to withhold taxes due, the buyer is subject to paying taxes from the sale owed by the seller who is a foreign person to the U.S. Treasury.

 

While it is incumbent upon escrow and all parties to the transaction to be knowledgeable and comply with all FIRPTA regulations, buyer is advised to seek competent legal or tax advice before proceeding.

 

If a foreign person is selling U.S. real property interest, whether the property is held as primary or secondary residence or investment, the following applies UNLESS there is a statutory exception from withholding:

 

Sales Price $300,000 or Less AND Arizona home buyer is acquiring the property as their principal residence where the buyer will occupy the property for more than 50% of the days it is occupied during the first 2 years of ownership.

No Withholding Required

Sales Price $300,001 - $1,000,000 AND Arizona home buyer is acquiring the property as their principal residence where the buyer will occupy the property for more than 50% of the days it is occupied during the first 2 years of ownership.

10% Withholding Required

All transactions – Any Sales Price when Arizona home buyer is NOT acquiring the property as their principal residence.

15% Withholding Required

 

 

WITHHOLDING from a seller who is a foreign person is NOT REQUIRED when:

  • Buyer acquires the property for use as their principal residence with a sales price no more than $300,000.
  • Seller Net after sale is zero – no gain.
  • Seller provides a Non-Foreign Affidavit.
  • Seller provides a Withholding Certificate from the IRS which excuses the withholding
  • Seller provides transfer agent a certification seller is not a foreign person with full name, address and their U.S. Tax Identification Number provided.
  • Or other exceptions which may apply that must be evaluated by escrow, legal counsel and/or the IRS.

For more information, go to:

https://www.irs.gov/individuals/international-taxpayers/firpta-withholding

 

Sam has 25+ years of full time real estate experience assisting buyers and sellers transact homes for sale in ChandlerGilbertMesaPhoenixScottsdaleTempe AZ and investment property.

Sam Elam - Associate Broker with Berkshire Hathaway HomeServices Arizona Properties serving Chandler, Gilbert and Mesa AZ
Author: Sam Elam,
Arizona Associate Broker, GRI, e-PRO, SFR
Berkshire Hathaway HomeServices Arizona Properties

Call: 480-213-1799 or Contact Sam to discuss your Arizona home sale and purchase plans and schedule an appointment to see how he can help you achieve your real estate goals.