Real property owned by a foreign person (or corporation) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. FIRPTA authorizes the U.S. to tax foreigners upon the sale or disposition of U.S. real property. Real property includes sales of parcels of real property and the sale of shares in a property holding corporation.
If you are purchasing property from foreign persons, you are required to withhold 10 percent (10%) of the amount realized (special rules for foreign corporations) ((You meaning, your attorney, title company))Withholding ensures taxation of the gain.
There are exceptions to the witholding, of them, the most common is when the purchaser/buyer purchases real estate for use as his home and the purchase price is not more than $300,000.
There are many rules and instances that govern FIRPTA. This page is meant to help with the understanding of what it is, generally speaking and should not be relied upon as "advice". For more information on FIRPTA you can visit the IRS website. For specialized instruction, you can contact a Tax Law Attorney, or particulary specialized in Naples: Stanley F. Rose, Attorney at Law, Foreign Investment in the U.S. and Abroad.
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