Except as provided in paragraph (7), this paragraph applies in the case of a disposition of any interest in any domestic corporation if the domestic corporation furnishes to the transferee an affidavit by the domestic corporation stating, under penalty of perjury, that – (3) Nonpublicly traded domestic corporation furnishes affidavit that interests in corporation not United States real property interests. Except as provided in paragraph (7), this paragraph applies to the disposition if the transferor furnishes to the transferee an affidavit by the transferor stating, under penalty of perjury, the transferor’s United States taxpayer identification number and that the transferor is not a foreign person. (2) Transferor furnishes nonforeign affidavit. (1) In general: No person shall be required to deduct and withhold any amount under subsection (a) with respect to a disposition if paragraph (2), (3), (4), (5), or (6) applies to the transaction. 1445, Withholding of tax on dispositions of United States real property interests, provides:Įxcept as otherwise provided in this section, in the case of any disposition of a United States real property interest (as defined in section 897(c)) by a foreign person, the transferee shall be required to deduct and withhold a tax equal to 10 percent of the amount realized on the disposition.
The general rule and exemptions as stated in Sec. If you have a duty to withhold and you fail to do so, you can be liable for an amount equal to your compensation in the transaction and in some cases for the amount of tax that should have been withheld The affidavit is needed to provide the buyer with assurance that the seller is not a foreign person. Principal residence is defined to mean that the buyer will reside there for more than 50% of the time in each of the next two years. An exemption from withholding is provided for individuals who purchase property for use as their principal residence for $300,000 or less. Description: Under Federal law, (the Foreign Investment in Real Property Tax Act (FIRPTA)() and the regulations thereunder (26 CFR Parts 1 and 602)), a buyer of real estate is required to withhold a tax from the sale of real property to a foreign person unless an exemption applies.
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