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Non U.S. Sellers: On December 18, 2015, President Obama signed the Protecting Americans from Tax Hikes Act of 2015 into law. This new Act increases the FIRPTA withholding for Non-U.S. Citizens from 10% to 15%. This change is effective for closings occurring February 16, 2016 and after. You can file with the U.S. Government to receive a refund as the tax is due ultimately only on a profit. Please note that this tax is only for Non-U.S. citizens selling their ownership.
What is FIRPTA?
The disposition of a U.S. real property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests.
A disposition means “disposition” for any purpose of the Internal Revenue Code. This includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc. Persons purchasing U.S. real property interests (transferees) from foreign persons, certain purchasers’ agents, and settlement officers are required to withhold 15% (10% for dispositions before February 17, 2016) of the amount realized on the disposition (special rules for foreign corporations).
For more information about FIRPTA: https://www.irs.gov/Individuals/International-Taxpayers/FIRPTA-Withholding
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