The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) requires ten percent (10%) of the purchase price to be withheld from foreign sellers of real property located within the United States. However, the seller may apply to the Internal Revenue Service (IRS) for a Withholding Certificate indicating that the disposition is either tax exempt (e.g. because the dollar amount is less than $300,000) or reducing the withholding amount (e.g. because the maximum tax liability for the disposition is less than ten percent (10%)). In most cases, the transferee/buyer acts as the withholding agent.
Experienced transactional attorneys can facilitate the withholding process, safeguard and document the funds to be withheld with an escrow agreement and coordinate with accountants to make sure they have the information necessary to timely file the applications with the IRS.
If you have any questions regarding the disposition of real property in New York by a foreign seller, please do not hesitate to contact an experienced attorney at (914) 338-8050. For more information about our firm please visit www.betenskylaw.com.