Canadians Buying Arizona Real Estate: Don’t Fear FIRPTA

Jonathan Dalton, Phoenix Real Estate AgentLet’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]

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at