Are you a FIRPTA? Winston Salem area home sellers need to know

If you go to list your house with a Realtor in NC, you will typically use Standard Form 101. In the seller representations section, paragraph 12(g) asks the seller to state whether they are a FIRPTA.

So it’s worth going over what a FIRPTA is, and the implications if you are.

FIRPTA stands for Foreign Investment in Real Property Tax Act.

For individuals, FIRPTA defines a “foreign person” as a nonresident alien individual.

A nonresident alien individual is someone who is a citizen of another country, and who has not been granted permanent U.S. residence as evidenced by the issuance of a permanent residence card a/k/a a “Green Card.”

Under FIRPTA, it may be required to withhold a portion of the sales price from the seller at closing if the seller is a “foreign person.”

If withholding is required, 10% of the purchase price (or 15% if the purchase price exceeds one million dollars) must be withheld and sent to the IRS.

There are exceptions to the withholding requirement, however. For example:

If the seller ends up selling to a buyer who intends to occupy the property as their primary residence and the sales price is $300,000 or less, no withholding will be required.

If the seller obtains a FIRPTA Withholding Certificate from the IRS prior to closing, no withholding will be required.