The central function of DIRECTS (Domestic and International Real Estate Closing Tax Services, Inc.) is to help non-US persons recover their withheld funds (tax) controlled by the IRS in connection with a US real estate transaction.
The IRS requires non-US parties who sell US real estate to have 15% of the gross sales price withheld at the time of sale, regardless of whether the seller made any profit on the sale (and regardless of whether the seller actually owes any income tax to the IRS).This is the current rule required under FIRPTA (the Foreign Investment in Real Property Tax Act of 1980).
The IRS requires non-US parties who sell US real estate to have 15% of the gross sales price withheld at the time of sale, regardless of whether the seller made any profit on the sale (and regardless of whether the seller actually owes any income tax to the IRS).This is the current rule required under FIRPTA (the Foreign Investment in Real Property Tax Act of 1980).
Services
In the early days, DIRECTS' clients consisted almost exclusively of Canadians selling (or earning rental income from) their winter vacation homes in the Palm Springs area. DIRECTS now has three offices in California (Palm Desert, Arcadia and Irvine) and assists around 1000 non-US persons (and rising) each year from countries around the globe.
Why Must a Non-US Seller of US Real Estate Obtain an ITIN (Individual Taxpayer ID Number)? The IRS requires that the buyer (via the escrow company or other settlement agent) deduct a withholding tax of 15% (of the gross sales price) from the sales proceeds at the time of close when the seller is a non-US person.
Non- US sellers of US real estate are subject to a withholding tax at time of sale (generally 15% gross sales price). But we know the withholding tax isn't really a tax, it's better thought of as a security deposit to ensure the real tax eventually is paid by the non-US person (so the IRS doesn't have to trust the foreign seller to mail in a check for the real tax owed from their home in Shanghai).
Foreign sellers of real estate must file both a (one-time) federal and state tax return in the calendar year after the sale. Foreign parties must file an IRS return, even if they received their entire refund already via the 8288-B (withholding certificate) process. DIRECTS regularly prepares IRS and state (usually California) tax returns for foreign sellers of real estate.
Reviews
Be the first to review Directs.
Write a Review
