If you are purchasing a Florida property, then it is important to know if the seller is a foreign seller. It is also important to remember that all sellers are assumed to be foreign until proven otherwise.
Be careful with the definition of “foreign seller,” as even a single-member Florida LLC may or may not be subject to FIRPTA withholding depending on the tax structure of the entity. An experienced business law attorney should make the determination as to whether or not the seller is subject to a FIRPTA withholding.
If you are purchasing a property from a foreign seller, then a FIRPTA transaction will most likely be involved. There are certain exceptions to the FIRPTA withholding requirement, such as a residency exception and the ability to request a IRS Certificate, but failure to properly adhere to the procedure and timeline could result in large penalties and fines from the IRS.
Although the withholding is taken from the Seller’s funds in order to pay the taxes for the sale of the property, it is the BUYER’s responsibility to ensure the FIRPTA withholding is properly withheld and submitted to the IRS. If this procedure is not done correctly, then the BUYER will be fined and penalized.
Here at Boyer Law Firm, we specialize in conducting closings for foreign buyers and sellers and we have a great deal of experience in conducting real estate closings that include FIRPTA transactions. If you are purchasing a property from a foreign seller, then contact us today!