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IRC 1445 FIRPTA withholding — does the buyer really hold back 15% of the entire sale price when I sell my U.S. property?
I'm a Mexican citizen and I'm selling a condo in Arizona that I hold through my LLC. The title company said they need to withhold 15% of the gross sale price under IRC 1445. The condo is selling for $400,000 but my gain is only about $50,000. Withholding 15% of $400,000 is $60,000 — more than my entire profit! Is there a way to get a reduced withholding amount? How long does it take to get the excess back?
Related Questions
What exactly is FIRPTA and how does it affect me as a foreign LLC owner with U.S. real estate?
I'm a Canadian citizen who owns a single-member LLC in Wyoming. I bought a rental condo in Phoenix through the LLC last year. My accountant mentioned something called FIRPTA that could hit me with a big tax bill if I ever sell. I looked it up but the IRS page is dense and confusing. Can someone explain in plain English what FIRPTA actually is, why it exists, and what it means for a foreign person who holds U.S. property through an LLC? I just want to understand the basics before I start planning anything.
FIRPTA withholding — when is it 15%, 10%, or 0%? I'm confused by the different rates.
I'm about to sell a property in Florida that I've held through my LLC (I'm a UK citizen, non-resident). My closing attorney told me the withholding is 15% of the sale price, but I've seen people online say it can be 10% or even 0%. My sale price is around $280K. Is there a way to get a lower rate? What determines which percentage applies? Also, is the withholding based on the sale price or on my profit? Because 15% of the sale price seems insanely high when my actual gain is maybe $40K.
Are there any exceptions where FIRPTA withholding doesn't apply? I keep hearing about loopholes.
I'm a German national selling a small investment condo in Texas through my LLC. Sale price is about $250K. I've been told I'll lose 15% to FIRPTA withholding at closing, but a friend said there are exceptions. He mentioned something about a $300K threshold and publicly traded companies. Are there legitimate ways to avoid or reduce the withholding? I don't want to do anything shady, just want to know if there are legal exceptions I might qualify for. The property was never my residence — strictly investment.
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