Foreign Buyer with Local LLC

2 Replies


I'm posting this on behalf of my buyer. My hope is some one may have experience with international investors. I have an international buyer who is selling her investment property in Florida (under contract) and is looking to buy another one. The property is in her LLC's name, which is US registered. Since she is short on cash, she would like to hold off on putting an offer on another property because she's not sure whether IRS will withhold funds from her sale for being a foreigner, or will they treat it as a US entity selling and purchasing? Would like to hear your views. She has an eye on what she wants to buy and does not want to lose out.

Thank you. 

@Clare Willa , You're referring to the FIRPTA (Foreign Investment in Real Property Tax Act).  When a non tax paying foreign entity sells property in the US the IRS requires that 15% of the sales price be withheld in anticipation of a recognition of gain.  There are three exceptions to this withhholding.

1. The sales price is less than $300K (I think) and the buyer certifies that they will be using the property for their primary residence.

2. The seller performs a simultaneous 1031 exchange ( or applies for a certificate of non recognition of gain at least 304 months ahead of the sale) and purchases new US property worth at least as much as they sold.

3. the seller is a US based tax payer and it also does a regular1031 exchange.

Your client could qualify for all three. I would guess without knowing the specifics about the LLC that their best option is #3.

Either way there's plenty of opportunity