Fort Lauderdale FIRPTA Attorneys
Dedicated FIRPTA Compliance Support
Understanding and complying with the Foreign Investment in Real Property Tax Act (FIRPTA) is crucial for foreign investors in U.S. properties. Making sense of this law and its provisions can be complicated, but fortunately, Salas Law Firm is here to help. Our team of experienced FIRPTA attorneys in Fort Lauderdale can ensure you comply with the law and advise on whether you qualify for withholding exceptions.
Request a consultation to discuss how we can assist you. Call (954) 420-6406 or reach out to us online.
What to Know About FIRPTA
FIRPTA was enacted in 1980 and requires foreign individuals or entities to pay taxes on gains from the disposition of U.S. real estate. “Disposition” can include “a sale or exchange, liquidation, redemption, gift, [or transfer].”
What Is the Purpose of FIRPTA?
The purpose of FIRPTA is to level the playing field for foreign and domestic investors by making certain foreign investors pay taxes on gains generated from U.S. real estate. Beyond promoting fairness, this provides revenue for the U.S. government.
Who Does FIRPTA Apply To?
FIRPTA applies to the following:
- Individuals who are neither citizens nor residents of the U.S.
- Foreign companies that are not U.S. corporations
- Foreign estates, trusts, and partnerships
How FIRPTA Works
Generally, FIRPTA requires those who buy U.S. real estate from foreign entities or individuals to withhold 15% of the purchase price. Then, they must provide these funds to the Internal Revenue Service (IRS). It is important to note that this process does not always apply. In some instances, buyers may withhold a lesser percentage. In other cases, it may not be necessary to withhold any dollar amount.
FIRPTA Exceptions
Transactions involving property that will be used for a primary residence are exempt from FIRPTA. The same applies if you buy or sell property for less than $300,000. In certain instances, it is also possible for sellers to obtain certificates to reduce the withholding amount or completely exempt them from it. For further information about when FIRPTA does or does not apply, consult our attorneys at Salas Law Firm.
FIRPTA & 1031 Exchanges
If you are planning to sell your U.S. real estate investment and reinvest the proceeds in another property, you may be able to utilize a 1031 exchange. This allows you to defer paying taxes on any gains from the sale if certain requirements are met.
However, FIRPTA can complicate this process for foreign investors. If FIRPTA applies to your transaction, then even if you use a 1031 exchange, you may need to pay taxes on gains above the amount withheld under FIRPTA. The withholding can significantly impact the potential tax benefits of a 1031 exchange, so it is important to consult an attorney beforehand. It is possible, for instance, to avoid withholding if you execute a simultaneous exchange, but doing so requires careful planning and the assistance of an experienced legal professional.
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Need Help with FIRPTA Compliance?
At Salas Law Firm, our Fort Lauderdale FIRPTA attorneys have the knowledge and experience to guide foreign investors through purchasing, selling, or exchanging U.S. real estate while ensuring compliance with all applicable tax laws. Contact us today for a consultation to discuss your situation and how we can help you.
Call (954) 420-6406 or connect with us online. We serve those with cases involving properties in Fort Lauderdale, Plantation, Broward County, and Naples.