Withholding Tax on Sale of U.S. Real Estate For A Non-Resident, non-Citizen Seller

The disposition of a U.S. real property interest by a foreign person is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests. A disposition means “disposition” for any purpose of the Internal Revenue Code. This includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc.

As a general rule, when a non-resident, non-citizen sells U.S. real estate, the U.S. government requires that 10% of the gross sales price be withheld at closing and paid to the U.S. tax authorities as an estimated tax payment on behalf of the seller.  To continue reading please click here.

Fro more information go to the IRS WEB site.