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We have a client that lives in Russia that owns property in…

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We have a client...

We have a client that lives in Russia that owns property in the US. They did not obtain a Federal Tax ID or Social Security number. They are getting ready to sell this property to US citizens. What forms do we need to obtain to for the sellers to sign and how much tax is withheld if any?

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There was a business on the property that his nephew owned but never paid the seller any rent so there has been no income as to date on the property.

Submitted: 11 months ago.Category: Tax
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9/14/2017
Tax Professional: Robin D., Senior Tax Advisor 4 replied 11 months ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 18,387
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

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Customer reply replied 11 months ago
Thank you.
Tax Professional: Robin D., Senior Tax Advisor 4 replied 11 months ago

U.S. tax law requires that any non-resident alien who sells an interest in U.S. real property is subject to withholding for tax purposes of 15% of the gross sales price. This is not the gain on the sale but the full price of the sale is to be calculated for withholding.

If he does not have an ITIN (tax number for US) a Completed Form W-7 (one per seller) is used to obtain the ITIN.

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Customer reply replied 11 months ago
Do we need to have a form 8288 or is that just for loans?
Tax Professional: Robin D., Senior Tax Advisor 4 replied 11 months ago

He will need to file a final U.S. income tax return (1040NR) to report the sale transaction. The tax return is filed to receive a refund depending on the number of owners and length of time that the property was held.

Yes, a buyer or other transferee of a U.S. real property interest, and a corporation, qualified investment entity, or fiduciary that is required to withhold tax, must file Form 8288 to report and transmit the amount withheld

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