Original Message:
BEWARE: Buying A U.S. Timeshare From A Foreign National Without An EIN (by Jon L.):
Note: FIRPTA = Foreign Investment in Real Property Tax. (Only the government lawyers could coin that one) BTW, the current 8288 suggests a 15% withholding.
Q: Who is responsible for FIRPTA withholding?
A: The IRS rules place the responsibility for withholding potential income tax due in the amount of 10% of the purchase price on the buyer of the real property from a foreign entity. The real property becomes the security for the IRS to ensure that they receive taxes that are due to them. If the payment is not made by the buyer, the IRS can seize the real property (or other assets of the buyer).
Q: Can’t the buyer assign the responsibility for withholding to the settlement or escrow agent?
A: There are no provisions in the IRS rules for the buyer to assign their responsibility to anyone else, including the escrow or real estate agents. The escrow agent cannot provide legal or tax advice.