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XXXXXX says if I am a foreign national and sell my home in USA, I must pay 10% tax on sell price of my home. By virtue of the fact that I have an L1A visa and my wife has an L2 Visa (which allows us to legally reside, work and pay US taxes on our worldwide income) – we are what are termed RESIDENT ALIENS. As resident aliens of the US for the past 3 years, we have had to pay US taxes every year on our worldwide income and will also have to meet with the IRS and file a “sailing permit” demonstrating that all prior and future obligations have been satisfied prior to our final departure from the US before the end of August. Our house sale has been listed as an asset in each of our tax returns filed and will be included in any settlement prior to our departure and final ’09 filing next year (but frankly there is no tax obligation on the sale of a primary residence or asset that generates a net capital loss). Based on all this, am I liable under XXXXXX to pay 10% taxes on sale of my home?

Submitted: 235 days and 3 hours ago.

Category: Tax

Value: $30

Status: CLOSED

State/Country: Texas

Already Tried:
selling my home in texas which i paid for out of pocket 3 years ago. title company is claiming that as a canada citizen, even though working here under l1a visa they feel i must put 10% of sell price in escrow to cover XXXXXX withholding "as a foreign national". Since I've been paying taxes on all income (US and global) these past 3 years and my tax returns filed as resident alien, am I still considered a foreign national with regard to XXXXXX? Am I stuck paying these 10% of sell price of my home?

Accepted Answer

XXXXXX says if I am a foreign national and sell my home in USA, I must pay 10% tax on sell price of my home. - that is not correct - according to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) a U.S. real property interest by a foreign person (the transferor) is subject to income tax withholding - income tax responsibility is determined upon filing a tax return - and if there is no income tax responsibility - all withholding would be refunded.
In additional - there are exemptions from XXXXXX mandatory withholding - see here - http://www.irs.gov/businesses/small/international/article/0,,id=102254,00.html

As you are living in the US and have a valid SSN numbers - you are residents for tax purposes - and not a foreign person - and as such you are not a subject of XXXXXX mandatory withholding.

Let me know if you need any help.

Expert:	LEV
Pos. Feedback:	99.4 %
Accepts:	7905
Answered:	7/29/2009

Tax Preparer

Taxes, Immigration, Labor Relations

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