FIRPTA

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Mortgage contractPotential clients frequently ask why they shouldn’t use a title company to handle the closing of their new home. Why spend more money to hire an attorney when a title company can close the deal for less? Excellent question.

Sure, a title company can create the documents necessary to close the deal. They can also generally guide the parties on some issues that might come up, such as what additional requirements must be met when the seller is considered a “foreign person” under FIRPTA.Continue Reading Top 5 Reasons to Hire An Attorney When Buying A Home

upward-trend-xsmall.jpgEffective February 16, 2016, recent changes to the Foreign Investment in Real Property Tax Act (“FIRPTA”) will require many buyers to withhold 15% of the purchase price when purchasing interests in real property from foreign sellers.

For those of you who don’t know, FIRPTA is a federal act requiring “foreign persons” to pay income tax on the amount realized from selling an interest in U.S. real property. When someone buys an interest in U.S. real property from a foreign person, FIRPTA requires the buyer to withhold a certain percentage of the purchase price to ensure the Internal Revenue Service (“IRS”) receives its share of taxes from the transfer. While the current laws and regulations require a buyer to withhold 10% in most instances, starting February 16, 2016, FIRPTA will require many buyers to withhold 15% of the amount realized by the foreign seller.Continue Reading FIRPTA Withholding Increase for Real Estate Buyers

The Foreign Investment in Real Property Act of 1980 (mercifully shortened in real estate and tax circles to “FIRPTA”) is a federal law designed to collect taxes on a foreign seller’s “disposition” of real property held in the U.S. The Act casts a wide net and applies not only to the sale of both commercial and residential properties, but also other real property interests such as swimming pools, mines, crops, and timber, just to name a few. Besides the typical sale of real property, the Act also extends to foreclosures and corporate mergers/reorganizations, among other “dispositions” of real property.

Foreign Investment on the Rise

With both residential and commercial real estate prices rising, but still deflated from the highs in 2008, both the U.S. as a whole, and Florida in particular, have experienced an influx of foreign investment in real estate.Continue Reading Increase in Foreign Investment = Increase in Tax Implications for Florida Real Estate Buyers