Foreign Investment in Real Property Tax Act FIRPTA

Foreign Buyers and Sellers Must Have Federal Identification Numbers In 1980, the U.S. Government implemented the Foreign Investment in Real Property Tax Act (FIRPTA). The purpose of this law is to impose an income tax on the gains derived by foreign persons from the sale of their U.S. property. FIRPTA imposes an income tax on the sale of any U.S. real property interest. If either the buyer or seller of the home is a nonresident or resident alien who neither has nor qualifies for a social security number, that person must file with the Internal Revenue Service on Form W-7. Form W-7 is the application for an IRS Individual Taxpayer Identification Number (ITIN) to be used for tax purposes only. It is not, nor does it qualify as, a social security number; it does not change the holder’s employment or immigration status under United States law. FIRPTA also affects an individual’s ability to execute a 1031 Exchange. debbiesmall.net