FIRPTA Affidavit
The FIRPTA Affidavit and Certification of Non-Foreign Status
The FIRPTA affidavit requirements are the same for all U.S. states since FIRPTA is a federal act. Some states also have their own acts for the disposition of U.S. property by foreigners.
The FIRPTA Affidavit
You are not eligible for an exemption or reduction of the withholding if the buyer is not an individual. The withholding rate in this situation will automatically be 15% of the contract price.
If the buyer is an individual
You may be eligible for a reduced or exempt withholding. The withholding rate on the sale of your property is based on the buyer’s intention. The IRS states:
“The buyer (transferee) acquires the property for use as a residence and the amount realized (sales price) is not more than $300,000.
The transferee or a member of the transferee’s family must have definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two 12-month periods following the date of transfer.
When counting the number of days that the property is used, do not count the days the property will be vacant.” See https://www.irs.gov/individuals/international-taxpayers/exceptions-from-firpta-withholding
If these conditions apply, you can ask the buyer if he/she is willing to sign a residential use affidavit attesting to those conditions. If he/she does not wish to do so, you will not be eligible to claim an exemption or reduction, and the standard withholding rate will apply.
If the buyer is not an individual
You are not eligible for any reduction of, or exemption from, withholdings. The withholding rate in this case is 15% of the purchase price. See Withholdings & Exemptions.
Certificate of Non-Foreign Status
According to Section 7701 of the Internal Revenue Code, the Certificate of Non-Foreign Status is the seller’s confirmation that they are a U.S. person for the purposes of U.S. taxation.
If you meet the conditions of the Substantial Presence Test (see below), this certificate confirms that withholding tax is not required and provides the following information, which is notarized:
- The property description.
- An affidavit that you are not a non-resident for the purposes of U.S. income tax.
- Your TIN (Tax Identification Number).
- Your address.
The certificate must be completed for each seller.
The Substantial Presence Test
The IRS states:
“You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least:
- 31 days during the current year, and
- 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
- All the days you were present in the current year, and
- 1/3 of the days you were present in the first year before the current year, and
- 1/6 of the days you were present in the second year before the current year.”
See https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test
Our FIRPTA Services
Dealing with all the FIRPTA requirements can be a real challenge. Although the information on this site is very helpful for those who want to take on the challenge, there’s a strong chance that you will hit some obstacles or perhaps leave out some important steps.
Save yourself time, stress, and problems by having FIRPTA GLOBAL do the work so you can breathe easy. We’re FIRPTA experts who know all the detailed steps, and we enjoy helping sellers breathe easy.
From start to finish, we handle all your FIRPTA needs. We will:
File all required FIRPTA forms.
Provide your title or escrow company with all required FIRPTA documentation.
If required, assist with obtaining an ITIN for each seller.
File the U.S. federal and state (if applicable) tax returns for each seller.
Let FIRPTA GLOBAL Handle Your FIRPTA Needs
Our services can be provided virtually or in person. Contact us to start the process!