New York City real estate attorney Natalia Sishodia (https://sishodia.com/what-is-firpta-foreign-investment-in-real-property-tax-act/) of Sishodia PLLC has recently published an insightful article explaining the intricacies of the Foreign Investment in Real Property Tax Act (FIRPTA). The article sheds light on the importance of understanding FIRPTA requirements for foreign sellers and individuals purchasing real estate from foreign persons, as well as their responsibilities under the Act.
In the article, New York City real estate attorney Natalia Sishodia explains that FIRPTA was enacted to collect taxes from foreign individuals who sell real property in the United States. Sishodia emphasizes the significance of obtaining guidance from a knowledgeable New York City real estate attorney, particularly one who has experience with foreign investment and IRS laws related to FIRPTA.
Sishodia provides an overview of FIRPTA withholding, explaining that a portion of the capital gains derived from a property transfer between an American and a foreign individual or company must be withheld. The IRS establishes a standard withholding rate, but the actual amount withheld depends on the profit obtained from the sale. According to New York City real estate attorney Natalia Sishodia, “It is important to note that ignorance of these requirements is not considered a valid excuse for non-compliance, according to the IRS.”
The article delves into the history of FIRPTA, discussing its enactment in 1980 and the reasons behind it. Before FIRPTA, foreign sellers were not subject to any taxes for capital gains upon the sale of U.S. real property. Congress introduced FIRPTA to level the playing field by requiring foreigners to pay tax based on the gross amount realized by a foreign seller of domestic real estate.
Natalia Sishodia also outlines the responsibilities of buyers and sellers in transactions governed by FIRPTA. Buyers purchasing a property from a foreign individual are required to withhold a percentage of the purchase price, which will be held by the IRS to offset any taxes owed on the sale. The article further discusses the different withholding rates based on the sales price of the property.
Sishodia concludes the article by explaining the exceptions regarding FIRPTA, noting that there are instances where the amount withheld can be reduced or eliminated altogether. The article encourages foreign individuals selling domestic real estate and buyers purchasing from foreign sellers to understand their obligations and options as they apply to FIRPTA.
To navigate the complexities of FIRPTA and other real estate transaction issues, consider reaching out to the highly experienced team of real estate attorneys at Sishodia PLLC. Their dedication to providing exceptional legal services will help clients make informed decisions throughout the process.
About Sishodia PLLC:
Sishodia PLLC is a New York City-based law firm focusing on real estate law, offering comprehensive legal services to clients in various aspects of real estate transactions. The firm’s knowledgeable and experienced attorneys are committed to providing exceptional legal representation and personalized attention to each client’s unique needs.
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