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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15588
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Hi I am selling a property i own in the usa. I live and work

Resolved Question:

Hi I am selling a property i own in the usa. I live and work in the UK and used it when I visited the USA. I have made a profit on the sale and the title company are withholding 10% of the total sales price for firpta. I have never rented it only made improvements to it. I work in the UK for a UK company and am taxed at source by HMRC (UK version of the IRS) I have no social security number in the USA or tax ID number as I have never received revenue from the property. I have a US mortgage on the property and the funds I transferred to the US from the UK to purchase the house. The Firpta amount being held is approximately $50K. Can I get any of this back and if so what do I need to do?
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

Megan C :

Hello and welcome to JustAnswer.com

Megan C :

How are you today?

Megan C :

The FIRTPA withholding is just that - a withholdinig.

Megan C :

It is meant to go towards your US tax liability. You may owe more tax, or you may owe less tax in which case the amount would be refunded to you

Megan C :

What you need to do first is get an ITIN, which is the tax ID number by filing form W-7

Megan C :

Once you have a tax ID number, you can file a tax return 1040NR and you will list this transaction on schedule D. You are liable for tax only on the amount in which your sales price exceeds what you purchased the house for.

Customer:

Thanks for the answer. I am in the UK. Form W7 asks for a certified copy of my passport. I have a US notarised one and also a copies of the sales documents including my passport that were used at the time of purchase. Will they be sufficient?

Megan C :

If you were not in the US for at least 183 days during the year, you are not taxed on your capital gains.

Megan C :

The US notarized one should suffice. Yes, those documents should work

Customer:

i wasnt in the US for 183 days

Customer:

i wasnt in the us for any part of 2013

Megan C :

Then you shouldn't be taxed on the sale as it is a capital gain. So, you should get your entire amount back.

Customer:

so just get the tax id and fill out a w7 then? I keep getting told i need to file a us tax return

Customer:

then fedex it to the title company?

Megan C :

Yes, you will need to file a 1040NR to get a refund of this money back

Megan C :

No, the title company already sent the money to the IRS. The IRS will handle it from there.

Customer:

so fill out the 1040NR and the w7 and send it to the irs after I close

Megan C :

Yes, you can't file the 1040 NR until after the close of the year

Megan C :

You need to send in the W-7 now

Megan C :

so that you have your tax ID

Customer:

so i cant file before december 31st 2013?

Megan C :

No, you can't file before then because you are filing a 2013 tax return

Customer:

ok i keep getting told i can file now or get an excemption certificate to get the money earlier

Megan C :

Okay let me look at the exemption certificate and see if that's an option for you. Please hold on a minute.

Megan C :

I thought the deal already closed and the funds had already been withhld.

Customer:

they will be on the 1st December

Megan C :

Well, there's not enough time to get a withholding certificate

Customer:

fingers crossed

Megan C :

first you must have your Tax ID number, and then you make the application for withholding certificate and the IRS can take up to 90 days to process

Customer:

and i cant apply for it and say tin applied for and send both forms at the same time?

Megan C :

The IRS states "The IRS will generally act on these requests within 90 days after receipt of a complete application including the Taxpayer Identification Numbers (TIN’s) of all the parties to the transaction."

Megan C :

So, you would have to have a TIN for this to be a complete application

Customer:

thank you you have been brilliant

Megan C :

I'm glad I could help you. Is there anything else that I can assist you with today?

Megan C :

If not, please rate me positively so that I may receive credit for assisting you today

Customer:

no thats great I shall be in touch if there is and i am sure there will be as i am going to the title company

Megan C :

Okay sounds good

Customer:

so positive you wouldnt believe !

Customer:

pleasure

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15588
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 4 other Tax Specialists are ready to help you

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Megan C
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Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level