FIRPTA stands for Foreign Investment in Real Property Tax Act, and it applies to all "foreign persons" selling real estate in the U.S. (our firm focuses solely on sellers of Hawaii real estate).
A "foreign person" for the purposes of FIRPTA is:
a nonresident alien individual
a foreign corporation that is not being treated as a domestic corporation
a foreign partnership
a foreign trust, or
a foreign estate.
A resident alien individual is not a foreign person.
FIRPTA - Not a Tax
FIRPTA withholding is 15% - more than double HARPTA withholding! But like HARPTA, it is not a tax; it is a withholding - an amount held by the government in anticipation of possible future taxes.
So if the Internal Revenue Service ("IRS") withholds more than the home seller's actual tax liability (which is nearly always the case), you - the seller - are entitled to a reduction in the amount withheld by the IRS.
Take Care of Both FIRPTA & HARPTA Together
Any seller who is subject to FIRPTA will also be subject to HARPTA, and both filings share much of the same documentation and information, so it makes sense to hire one firm to handle both filings.
We have extensive experience doing both HARPTA and FIRPTA filings, so whether you are a foreign home seller, or a real estate agent representing one.
Contact us today and find out how how we can help you.