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Did you know that the withholding requirements under FIRPTA have changed?

February 12, 2016

The Foreign Investment in Real Property Tax Act (FIRPTA) requires a person who buys real property from a foreign person to withhold a portion of the seller’s proceeds at closing. Starting February 17, 2016, the amount that has to be withheld is changing for certain transactions. When the sales price exceeds $1 million, the buyer must now withhold 15% of the sales price. Previously, the withholding amount was 10% of the sales price.

Specifically the changes are:

  • If the sales price is $300,000 or less, AND the property will be used by the buyer as a residence, no sums need be withheld or remitted.

  • If the sales price exceeds $300,000 but does not exceed $1,000,000, AND the property will be used by the buyer as a residence then the withholding rate is 10% on the full amount realized.

  • If the sales price exceeds $1,000,000, then the withholding rate is 15% on the entire amount, regardless of use by the buyer

If you have any questions regarding FIRPTA, please contact one of the attorneys listed below.


CONTACT

Matthew D. Alegi
Sarah D. Cline
David M. Kochanski
Marc D. Lipman

MORE INFORMATION

For more information regarding our Residential Real Estate Settlements Group or our general real estate transactions and litigation practice, please contact the Group Chair at 301-230-6574 or settlements@shulmanrogers.com.

This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.