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Can the Buyer Rely of the Seller’s Certification That They are not a Foreign Person?

 

Can the Buyer Rely of the Seller’s Certification That They are not a Foreign Person?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Check out this explainer video

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The IRS assumes that FIRPTA withholding applies to every closing, unless one of the withholding exceptions is met. The most common exception applies where the sellers can certify that they are not “foreign persons” for FIRPTA purposes.  In other words, that they are either U.S. citizens or resident aliens with “green cards.” This is the seller’s “Non-Foreign Certification” with which we are all familiar, and which we use whenever possible.

 

The buyer (and the closing agent and Realtors®) can rely on the seller’s certification, as long as they have not received any notice or have any actual knowledge that the certification is false.

The buyer and the closing agent should retain a copy of this document for a period of five years.

 

If the seller can sign the non-foreign certification, there is no withholding requirement, and no risk of tax liability to the buyer. Of course, sellers who are in fact foreign cannot sign this certification, so the parties to the closing must either find another exception or comply with the 15% withholding requirement.

 

Check Out These Other Articles and Resources

 

FIRPTA Withholding Certificate Calculator

Done For You FIRPTA Process

FIRPTA FAQs

FIRPTA Withholding Explained

Three Really Bad Times to Discover FIRPTA

Is Every Property Under $300,000 Exempt from FIRPTA, NO!

If You Are the Realtor of the Buyer Involved in a FIRPTA Transaction, Is You Job Complete Once the Title Company Says They Have Sent the IRS a Check

Is Your Seller Foreign Under FIRPTA- Maybe Not!

Does the Buyer’s Liability End with the Signing of the FIRPTA Certification of Residential Occupancy- NO!

Does the Buyer’s Liability End with the Buyer’s Certification of Residential Use to Reduce the Seller’s Withholding Rate- NO!

Opportunities for FIRPTA Tax Withholding Reduction, Exemption, and Exclusion for an Individual Seller

Definitions of Terms and Procedures Unique to FIRPTA

Who Is Considered a Foreign Seller under FIRPTA

Can a Foreign Seller Use a Section 1031 Exchange to Avoid FIRPTA Withholding- Yes Under Certain Conditions!

Opportunities for FIRPTA Tax Withholding Reduction, Exemption, and Exclusion for an Entity Seller

 

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