Need-to-know items (2)
If you will be financing any portion of the purchase, you will need a good lender. Not all lenders work with foreign buyers. Contact us for a list of preferred lenders.
Foreign buyers who do not have Social Security numbers, will need to apply for an ITIN (Individual Taxpayer Identification Number) in the U.S. through the Internal Revenue Service (IRS). General information regarding the ITIN can be found here- https://www.irs.gov/Individuals/General-ITIN-Information. The link to the form to apply can be found here- https://www.irs.gov/pub/irs-pdf/fw7.pdf.
Property Management Companies
If you will be planning on using your vacation home as a short-term rental, you will need a property management company that you can trust. Property Management companies offer a variety of services including bookings, lawn &pool maintenance, pest control, bill pay, marketing, repairs, etc.
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 it share of taxes from transfer. As of February 16, 2016, FIRPTA will now require many buyers to withhold 15% of the amount realized by the foreign seller.
Technically, the amount of tax required to be withheld under the provisions of FIRPTA cannot exceed the maximum tax liability of the transferor. Many times, the maximum tax liability is significantly less than the 15% required withholding. Under these circumstances, the regulations provide a procedure by which the Internal Revenue Service (IRS) can agree to an amount which is less than the required 15% withholding. The agreement of a reduced amount can be obtained by applying for a withholding certificate. This procedure is generally done by submitting a properly completed IRS Form 8288-B. Either the transferor (seller) or transferee (buyer) may apply for the withholding certificate. Contact us, or a Tax Accountant, for more information on FIRPTA.