Foreign owned tax on sale or property

Foreign owned tax on sale or property

Investor · Germany · Member since 2018 · 2 posts · 0 votes

I’m at a loss for words. My wife is not a US citizen. We bought a condo in Tacoma, WA in 2013 that has seen a significant increase in value. I’m in the military and we have moved and are in the process of selling the unit. 

My agent just told me that since my wife is on the title of the property we have to pay 10-15% foreign owned property tax on the profit, this is a sickening feeling because the value has more than doubled. 

The other reason it is sickening is because she didn’t need to be on the title in the first place. My original realtor said she had to be on it because of WA state laws. She confused being a communal property state with the idea that meant both names had to appear on the title even though I am the only one on the loan. 

Anyway, I need help to understand this better. Whether someone in the BP community has advice or can suggest who I might even talk to about this? From what I was told, this error/issue wil cost us between $25-35k just for this tax. 

Don’t get me wrong, we have been blessed to buy a great property at the right time, but I could send a kid to college on that kind of money and it is possibly going to an avoidable tax. 

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  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    8y
    It is Not an additional tax, it’s set up that way for foreigners so Uncle Sam knows they will get the proper tax. When you guys file your annual taxes this amount will be credited to what you owe, or refunded if it is more than you owe. Look up FIRPTA.
  • Investor · Germany · Member since 2018 · 2 posts · 0 votes
    8y

    Thanks for the response Wayne. After reading more in depth, I informed my realtor that we do not need to pay the FIRPTA on our sale. FIRPTA is for non-resident aliens. However the law uses “foreign person” and “non-resident alien” interchangeably. Fortunately for us, green card holders, foreigners married to US citizens and more are not defined by the IRS as non resident aliens. 

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