Does a foreign national seller need an ITIN # for a FIRPTA sale?

This question comes up often in Florida’s real estate market when the FIRPTA (Foreign Investment in Real Property Tax Act) applies to a sale.

According to Monte Gordon, CPA and Tax Partner at Cherry, Bekaert & Holland LLP : ” A seller only needs an ITIN if he is applying for a reduced withholding certificate, form 8288-B.  If the buyer is simply withholding the standard 10%, then the seller doesn’t need an ITIN, however, he will eventually need an ITIN to file a US income tax return to claim a credit for the withholding”.

A foreign national seller preparing for a real estate sale who is concerned about the 10% withholding requirement, can plan ahead and apply for a withholding certificate to reduce or eliminate the capital gains tax due. If received prior to closing, title agents are authorized to make adjustments based on the IRS issued withholding certificate.  The seller needs to allow 90 days for the FIRPTA withholding certificate application process to be completed and the contract closing date should reflect this. The FIRPTA Contract Rider should also be used. To find out if FIRPTA applies, you can use our our Does FIRPTA apply? diagram .

Need additional tax advice? Monte Gordon, CPA can be reached 305-742-8301 or at mgordon@cbh.com

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