Did you know… that the withholding requirements under FIRPTA have changed?
The Foreign Investment in Real Property Tax Act (FIRPTA) requires a person who buys real property from a foreign person to withhold a portion of the seller’s proceeds at closing. Starting February 17, 2016, the amount that has to be withheld is changing for certain transactions. When the sales price exceeds $1 million, the buyer must now withhold 15% of the sales price. Previously, the withholding amount was 10% of the sales price.
Specifically the changes are:
- If the sales price is $300,000 or less, AND the property will be used by the buyer as a residence, no sums need be withheld or remitted.
- If the sales price exceeds $300,000 but does not exceed $1,000,000, AND the property will be used by the buyer as a residence then the withholding rate is 10% on the full amount realized.
- If the sales price exceeds $1,000,000, then the withholding rate is 15% on the entire amount, regardless of use by the buyer