Finweek English Edition - - COVER STORY -

Un­der the For­eign In­vest­ment in Real Prop­erty Tax Act (FIRPTA), a buyer must with­hold 10% of pur­chase price if the seller is a for­eign national. No with­hold­ing is re­quired if the seller is a US cit­i­zen; green card­holder (law­ful res­i­dent); or res­i­dent alien (meets ei­ther the phys­i­cal pres­ence test − present in the US for at l east 1 83 days in the cur­rent cal­en­dar year; or the sub­stan­tial pres­ence test − present in the US for a weighted aver­age of 183 days over three years).

At the time of pur­chase, in­form your for­eign buy­ers that they must ac­quire a US tax­payer iden­ti­fi­ca­tion num­ber (TIN). Wait­ing un­til the time of sale to ob­tain a TIN may cause dif­fi­culty re­cov­er­ing money with­held pur­suant to FIRPTA.

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