Property Sale of Non Resident Foreigners
Foreigner's Real Estate Sales and Tax
Terry Kim
12/8/20231 min read
When you buy the real estate property from foreigners, the following rules apply to foreign diplomats, consular officers, foreign students, or scholars visiting the US in the A,F,M,G-IV or Q non-immigrant categories.
The taxpayers have 3 options below.
Firstly, they can apply for Form 8821 and receive a withholding certificate from the IRS before the transfer of a principal residence. The certificate is a notice to the purchaser that there is no (or reduced rate of) withholding tax applicable to the sale.
Secondly, if the 15% withholding tax was paid when the principal residence was sold, the taxpayers can apply for a withholding certificate and request an early refund.
Third, as an alternative to the second option, the taxpayers can obtain a withholding certificate and apply for a refund when they file their US income tax returns for the tax year in which they sold their principal residence.
Buyers, who are generally the withholding agents, must use 8288 and 8288-A to report and pay to the IRS any tax withholding on the acquisition of US real property interests from foreign persons.
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