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bkb1956
bkb1956, Finance Enthusiast
Category: Finance
Satisfied Customers: 2863
Experience:  IRS Enrolled Agent, 18+ years of experience in tax preparation with associated finance experience.
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Need some answer about FIRPTA, what credit are allowed to claim foreign seller who w

Customer Question

Need some answer about FIRPTA, what credit are allowed to claim for a foreign seller who wants to sell a couple of properties in USA. During the last 15 years he has been paying taxes, and he has a mortgage. He wants to know what things he can deduct to recover any amount from FIRPTA, for example if he can deduct depreciation, and property taxes. One is rented, other is vacation, and for the last five years her sister live in there. Values are $450,000 and $465,000
Submitted: 7 months ago.
Category: Finance
Expert:  bkb1956 replied 7 months ago.
Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.The disposition of a U.S. real property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests.A disposition means “disposition” for any purpose of the Internal Revenue Code. This includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc. Persons purchasing U.S. real property interests (transferees) from foreign persons, certain purchasers' agents, and settlement officers are required to withhold 15% (10% for dispositions before February 17, 2016) of the amount realized on the disposition (special rules for foreign corporations).https://www.irs.gov/Individuals/International-Taxpayers/FIRPTA-WithholdingFIRPTA is separate from income tax.There are exceptions from FIRPTA withholding:https://www.irs.gov/Individuals/International-Taxpayers/Exceptions-from-FIRPTA-WithholdingPlease let me know if you require further information or clarification.Thank you and best regards,Barb
Expert:  bkb1956 replied 7 months ago.
Just following up with you to see if you have any other questions or concerns. If so, please come back to me here, and I will be happy to assist you.Thank you and best regards,Barb

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