U.S. Non-Residents: Selling Foreign Property Taxes

After the sale of your U.S. property has been finalized, you will need to complete the following before you file your U.S. and country of residence tax returns:

1 The rate of withholding tax on the sale proceeds needs to be determined. The buyer will withhold this tax and remit it to the IRS.

2 All required withholding forms are to be completed and submitted to the IRS.

3 All U.S. non-residents who need to file a U.S. tax return are required to have an ITIN (Individual Taxpayer Identification Number). If you don’t have a valid ITIN, you should complete an ITIN application immediately after the sale of your U.S. property has been finalized.

4 Determine the capital gain or loss on the property sale. The tax rate for capital gains is based on how long you have owned your property, your tax bracket (income range), and your property use (for example, a vacation home).

U.S. Income Tax Returns

You should file your U.S. tax return before filing the tax return for your country of residence. Each seller is required to file individually.

Personal U.S. federal tax return: Form 1040-NR, U.S. Nonresident Alien Income Tax Return.
Personal U.S. state tax return, where applicable. Some states do not have state income tax.

Other required documentation and information:

Your ITIN
A copy of the final 8288-A, stamped by the IRS
Final settlement statements for the sale of your property
Capital improvements made during your property ownership
The number of days you were present in the U.S. for the preceding three years

Tax Return For Your Country of Residence

Depending on your country of residence:

You might be subject to tax on your worldwide income, including gains on your U.S. property sale.
You might also be able to claim a foreign tax credit for the U.S. taxes paid.
In certain situations, your property may be treated as your principal residence.

FIRPTA GLOBAL: U.S. Income Taxes Done Right

Your U.S. personal tax returns should be prepared by someone knowledgeable about the required documentation and information with respect to FIRPTA. If the requirements aren’t met, this could cause serious delays, late filing penalties, and interest charges.

As FIRPTA and U.S. tax experts, we’ll make sure that your tax filing is done right so you can breathe easy.

Let FIRPTA GLOBAL Handle Your FIRPTA Needs

Our services can be provided virtually or in person. Contact us to start the process!

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