I'm here today to talk to you about birth and withholding certificates, and how to obtain a withholding certificate if you are subject to withholding. I'll keep this video brief, under five minutes, so let's get into it. For foreign individuals who do not live in the U.S. and do not possess a U.S. green card, U.S. passport, or citizenship, if you sell real estate or any property located in the U.S., the buyer is required to withhold fifteen percent of the gross selling price. For example, if you sell a house for a million dollars as a foreign person, the buyer needs to withhold $150,000 (15 percent) and remit it to the IRS. If they fail to do so and do not file a tax return, the buyer will be responsible for that amount. Most people go through brokerages and get loans, and those professionals are aware of the withholding requirement and will ensure the money is withheld. If you happen to be a foreign person who purchased a house and within a year you sell it, the same example applies. If there is no gain, meaning you sell it for the same price as you bought it, there is no tax liability and it is a wash. You might question why you have to have $150,000 withheld and then file a tax return to claim a refund. The answer is that you don't have to. You can apply for a withholding certificate, but the process is quite complicated. Form 8288-B is the form you need to file. You need to fill in the contract details, such as the price and the planned sale date, and mail it to the IRS before closing the transaction. One common hiccup in this process is that you need a tax ID number. Many foreign individuals...
Award-winning PDF software
Video instructions and help with filling out and completing Form 3520 Withholding
