Can a foreign national seller do a FIRPTA 1031 tax deferred exchange?
Can a foreign national seller do a FIRPTA 1031 exchange?
According to Diane Rivera, Regional Manager for Starker Services, ” Yes, a Foreign national can do an IRC §1031 tax deferred exchange. The FIRPTA rules must still be followed and the closing/withholding agent will still need to withhold the 15% at the time of the closing. The foreign investor will need to coordinate with a CPA to file an Application for Withholding Certificate. Do you think your customer has the ability to deposit an amount equal to the 15% withholding at the time of closing? If so, this will allow her to go forward with the exchange while waiting for the withholding certificate from the IRS. When she provides the approved certificate to the withholding agent, they can then release the 15% back to her. An investor contemplating an IRC §1031 tax deferred exchange should consult with their tax and/or legal adviser in addition to the Qualified Intermediary.” Need a qualified intermediary for your transaction? Diane can be reached at Diane O. Rivera, CES®, Regional Manager, Starker Services, Inc 305-807-2320 or [email protected] www.starker.com
These transaction are multi-layered and need professional guidance to avoid both tax and legal liabilities for both buyers and sellers. We also recommend that sellers use a stand alone FIRPTA rider to make it clear to buyers they will be involved in a FIRPTA transaction. The Closing Company Title & Escrow can seamlessly handle your FIRPTA sale including hiring the CPA component of the transaction for the IRS Withholding Application . Please contact us for more information at [email protected] or call 305-271-0100.
FIRPTA application for withholding IRS form 8288b
Sample FIRPTA IRS withholding certificate
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