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FOREIGN
INVESTMENT ADVISORY |
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By: Stanley F. Rose |
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Recent IRS regulations have complicated the lives of real estate brokers, tax attorneys and accountants. The FIRPTA 10% (a withholding at closing of 10% of the sale price if the seller is a foreigner - see nabor.com for my articles on this topic - go to real estate services, then document library, then reference materials) has up to now in many cases been avoided or reduced by filing a withholding certificate application with the IRS on behalf of the seller on or before the day of closing. This allows the 10% to be escrowed by the closing agent until the IRS answers (usually 90-120 days). Now, all such applications and Form 8288-B must bear the tax number (the TIN) of the seller. Morever, even the remittance of the 10% to the IRS with Form 8288 and 8288-A requires a tax number of both buyer and seller. A TIN takes from one to three months to receive so all real estate agents are urged that once they get a listing by a foreign seller, that the seller, at once, file a W-7 with the IRS to obtain a tax number; if this is a foreign juridical person, they file a SS-4. This problem is of utmost urgency and must be addressed in a timely manner by all foreign sellers, their real estate agents, and their professional advisors. The regulations cover other FIRPTA areas and must be reviewed by the advisors of both the seller and the buyer. In addition, it appears that the buyer must also have a tax number, so this process must also be repeated as soon as a sales contract is signed. The reduction or elimination of the 10% is of great interest to the seller so the seller is really in the "hot seat" here. However, the buyer is responsible for the withholding. Thus, both parties must take action at once on this matter. Foreign persons who invest in the United States, who intend to immigrate to the United States, or even merely visit the United States for longer than four months a year, should always consult with their tax advisors to ascertain their rights and duties each year under U.S. tax law, inform themselves of any recent changes which may affect them, and review strategies to adapt to best achieve the correct tax results for their particular individual situation. The U.S.-German Estate and Gift Tax Treaty, as well as any other applicable treaties, must be analyzed in depth.
Stanley F. Rose is
a foreign investment attorney in Naples, Florida who also serves as Of
Counsel for the Lantana and Naples law firm of Wayne M. Levine,
concentrating in income, estate and gift taxation for resident and
non-resident aliens investing in the U.S. and in foreign trade and
transactions. He is Florida Board Certified for International Law and is
a Florida Civil Law Notary. He speaks English, Spanish, Portuguese,
German and French and can be reached at Tel. (239) 566-3511 and Fax
(239) 566-8523; E-MAIL:
SROSE@ROSETAXLAW.COM;
WWW.ROSETAXLAW.COM. |