Let’s start with the disclaimer that I’m neither a tax professional nor a lawyer. For professional tax or legal advice, get in touch with a professional in the field you need. Actual results may vary.
Here’s the short story on FIRPTA – the Foreign Investment in Real Property Tax Act of 1980. If you’re a foreign national purchasing real estate here in the states, when you sell the sale could be subject to 10% withholding. The buyers are responsible for making sure the 10% is withheld, though it’s usually handled by the escrow company.
Clearly not something that can be ignored but also not something that necessarily should stop you from purchasing a home here in the Phoenix real estate market or elsewhere here in the states. One reason why, per the Internal Revenue Service’s FIRPTA page …
One of the most common exceptions to FIRPTA withholding is that the transferee (purchaser/buyer) is not required to withhold tax in a situation in which the purchaser/buyer purchases real estate for use as his home and the purchase price is not more than $300,000.
Few of the potential buyers to which I’ve spoken are looking into the $300,000 range, though if you’re close an you’re expecting appreciation it’s something to consider. Stay well below $300,000 and sell to someone looking for a primary residence and you’re exempt.
Unless Congress changes things, that is.
[tags]Canadians buying Arizona real estate, Phoenix real estate[/tags]