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Tax implication for foreign Buyers and Sellers:

July 30th, 2015 10:55 AM by Christel Silver


When you are purchasing a property in the US, you do not need a tax ITIN number, but you want to make sure to discuss with a tax attorney prior to writing an offer how to take title, so you are understand the implications of a possible estate tax. 


If you are renting your property you do, as you have to pay taxes on the rental income.

If your property is managed by a Realtor® or managing company, they are responsible to withhold 30% of

the rental income and pay the amount to the IRS unless you have an ITIN number.


If you are selling your real estate – you have to have an ITIN number – so get prepared and do not delay your settlement. (IRS form W-7) 

Why do you need this ITIN number? The disposition of a U.S. real property interest by a foreign person (seller) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. If the sales price is more than $300,000 the title company has to withhold 10% of the sales price  -  not the profit – and pay it to the IRS.  For sales below $300,000 there is an exemption for the withholding, but not for paying the taxes!  The title company cannot make the payment without you having a ITIN number and they are responsible to paying the money to the IRS in a certain time frame. 


You need a certified copy of our passport – this can ONLY be done at the US embassy in your home country or at the local IRS office in the US, and you need to fill out

form W-7 – each owner, even if you are married! The purchaser of your real estate has to declare responsibility to the IRS that they are paying any taxes the seller is not paying!  They have to file    with the sales contract.  It is even more complicated if the buyer is a foreign National also.  


It is important that you consult with a CPA familiar with taxation for foreign nationals before you 00



Posted in:Internationl
Posted by Christel Silver on July 30th, 2015 10:55 AM