Recent changes to FIRPTA (U.S. Foreign Investment in Real Property Tax Act of 1980) are impaction foreign investors and benefiting the real estate community!
Here are the changes:
1. The law doubles the maximum amount of stock ownership a foreign investor may have in a U.S. publicly-traded real estate investment trust, bringing it from the current 5 percent to 10 percent.
2. Allows some foreign pension funds to invest in real estate investment trusts without FIRPTA Applying
3. For Foreign Sellers, there is an increase in FIRPTA Withholding from 10% to 15%
Here’s How The Withholding Works:
Three levels of property purchases
A personal residence of $300,000 or less; a personal residence worth more than $300,000 but less than $1 million; and properties valued at $1 million or more:
$300,000: Foreign sellers currently pay no FIRPTA tax, and this doesn’t change under the new rule, providing the property will be used as a residence
$300,000-$1 million: The current 10 percent FIRPTA tax does not change under the new rule, providing the property will be used as a residence
$1 million-plus: The FIRPTA tax goes up from the current 10 percent to 15 percent after Feb. 16. In this $1 million-plus category, it doesn’t matter whether the property will be used as a residence or not.
If you need more information on charges to FIRPTA and how it effects your sale or purchase, call Alex at James N Brown PA, 561-838-9595! Get real advice and real help from the experts.